How To Get An Auto Loan With Poor Credit

If you have a less-than-desirable credit score, you’re likely worried that you won’t get a car loan from a traditional bank or credit union. However, before opting for a loan from a buy-here-pay-here vendor, consider researching your options. Having poor credit — between 300 and 500 — can make getting a car loan more difficult, but it’s not impossible. Below, we’ve put together a few tips to help you get approved for an auto loan even if you have a bad credit score.

Find out Where You Stand

Before you apply for an auto loan with poor credit, take some time to see where your finances stand. The best way to do this is by obtaining free copies of your most recent credit reports from Equifax, Experian, and TransUnion. These reports will show any negative information that was reported by credit agencies — such as late payments or bankruptcies. You may also be able to spot incorrect information that may be bringing your score down. If you do, get them removed immediately to see a boost in your credit score.

Get Preapproved

If your FICO score is in the low 500s or worse, and you haven’t had any late payments for at least six months, then you may qualify for an auto loan. One way to find out if this is the case is by going online and submitting a request for preapproved financing offers from different lenders at once. These sites will pull your information and provide you with multiple offers that are tailored specifically to you without affecting your actual credit score.

Research Lenders

Do some research on which lenders offer financing options for people with poor credit scores — especially if you need financing quickly. Some banks will require you to have more money down in order for them to approve your application. Others may accept a lower amount of collateral from you than what’s required by traditional banks and credit unions but may charge a higher rate of interest. Compare your options and shortlist the offers that seem good to you.