7 Ways To Buy a Car with Bad Credit

If you possess below satisfactory credit, your chances of buying a new car will be significantly more difficult than you may have imagined. 

For most people, owning a vehicle is a necessity for transportation to and from work, the grocery store and so much more. 

What many fail to understand until the time comes of buying a car that your credit score says quite a bit about you and the lower your score the slimmer your chances of being approved for auto financing. 

High interest rates coupled with extended repayment periods can end up costing you more than you can afford while traditional avenues used by consumers who possess average to above average credit are no longer available to you. 

Nevertheless, it is important to understand that you do have options available to you.

Below are 7 effective ways you can secure financing with bad credit to buy a car:

1. Improve Credit Prior to Shopping 

The best way to improve your odds of being approved for auto financing would be to clean up your credit prior to beginning the car shopping process. 

Pay off past-due sums, acquire a secured credit card and use it responsibly, dispute any errors that may be present in your credit statements and request that credit bureaus stop attaching negative information to your credit are all effective ways of improving your credit. 

2. Scope Out Loan Terms v.s. Monthly Payments 

This is a big one. 

Instead of looking at lower monthly payments, the more financially responsible avenue to focus upon would be to look at your loan as a whole, not just monthly payments. 

Understanding how much you are paying in full will enable you to clearly see if you can afford the loan repayment sums along with the interest tacked on. 

Choosing loan terms over monthly payments will help you out more than lower monthly payments coupled with higher APR. 

3. Bulk Up Your Down Payment 

Increasing the sum of your down payment can make you a better candidate for securing auto financing.

Not only will you improve your odds of being approved but a higher down payment will decrease interest rates, taxes and other fees while expanding your repertoire of available vehicles to scope out. 

4. Get Pre-Approved 

One way that many people with bad credit secure financing for buying a car would be getting pre-approved from a credit union or a bank. 

Getting pre-approved will not only better prepare you for the car shopping process but will eliminate the volume of work and stress that you’ll encounter along the way. 

Additionally, you’ll be able to to see how much you are approved for prior to the shopping process so you can navigate the marketplace accordingly.

5. Acquire a Cosigner 

If you’re in a real tight squeeze in regards to your credit situation one avenue that may increase your chances of acquiring a loan would be having a cosigner. 

You should be aware that if you are to default upon your loan, however, that your cosigner would then be responsible for making payments until the terms of the loan agreement have been met - which is why it is advised to only use this avenue if you know for certain you can make your loan repayments on time. 

6. Vehicle Selection Matters 

Many consumers are unaware that your desired car selection matters to loan agencies. 

Loan companies heavily weigh factors such as a vehicle’s age, history and milage during the loan application process. 

7. Scrounge Non-Profit Agencies 

Depending upon the state you reside within, you may be eligible for an auto loan through nonprofit agencies. 

3 Top-Rated Places to Secure a Financing 

Capital One 

A reputable company with over 12,000 dealers accepting their financing, Capital One not only offers competitive interest rates but they are also well-known for their extensive buyer-education resources. 

A couple stipulations for Capital One auto financing include a vehicle no older than 10 years along with fewer than 120,000 miles. 

Blue Sky Auto Finance 

Blue Sky Auto Finance is the light at the end of a dark tunnel for many consumers who are trying secure auto financing with bad credit. 

Even customers who have declared bankruptcy are still applicable to apply, given that their bankruptcy has been discharged that is. 

A couple requirements of Blue Sky Auto Finance include: A credit score of 550 or higher along with a monthly income of no less than $1,800 per month. 


Functioning more of less as an auto loan network, MyAutoLoan connects you with a multitude of lenders within minutes and specializes in applicants who possess bad credit. 

The increase of available lenders not only provides you with more competitive loan rates but a greater chance of approval, the only requirements are listed below: 

  • No Bankruptcies 
  • $1,800/month or $21,600/year income 
  • Cars must be less than 10 years old 
  • Cars must possess fewer than 125,000 miles 

Bottom Line 

The best way to ensure that you aren’t overpaying for an auto loan is to spend some quality time doing research and shopping around various auto financing lenders. 

We understand that having bad credit may make the process of acquiring an auto loan seem damn near impossible but with a little persistence from your end securing an auto loan is certainly obtainable. 

Do yourself a favor prior to shopping around for cars and auto loans and spend some time improving your credit, it will pay off dividends not only in the short-term but also further down the road. 

Make sure to spend time comparing various loan options and make sure you place an emphasis on browsing loan terms over monthly payment sums, knowing how much you are paying overall will provide you with a clear picture of whether you can truly afford the repayments required. 

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