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Bad Credit? Don’t Sweat It! How to Finance a Car with Bad Credit

That pesky credit score has the potential to wreak havoc in more ways than one, especially when it comes to buying a car. Whether you’ve found yourself in some challenging financial situations beyond your control or you need to work on managing your debt, there are a number of contributing factors that can affect your credit. The good news is that buying a car is still a reality, even when your credit isn’t the best, and it comes in the form of bad credit financing.

There are many benefits to financing a vehicle in this manner, and when you want to ensure you’re traveling safely, as well as have a monthly payment that meets your budget, you’ll want to check out this specialized financing option. If you’re one of the millions of Americans who struggle with their credit, take the first step in turning it around and be on your way to cruising down the highway in a car you can trust, as well as a credit score that makes you proud.

What Is Considered Bad Credit?

Bad credit affects approximately 48 million Americans, so if this is you, you’re definitely not alone. Typically, FICO scores below 580 are considered poor, which also means that it may be more challenging to buy a vehicle. Although there’s no set minimum credit score required to qualify for an auto loan, it’s been reported that 66% of auto loans go to borrowers with a credit score above 661. That said, the higher your score, the better your chances of securing an auto loan.

The bright side is that there are numerous ways to finance a vehicle, even if your credit needs some work. Bad credit financing options are available at several dealerships throughout the country, giving those who are working on their credit the opportunity to qualify for a loan and buy a reliable vehicle for their travels. It’s a common belief that everyone has the right to drive a safe and dependable vehicle, regardless of their financial situation, which is why so many dealerships have these options available to help those with bad credit travel with confidence. If this is you, don’t feel as though you’re stuck in your situation with a car that you can’t count on. Choosing bad credit financing can help you in more ways than you realize.

A woman is shown in the front seat of a new car after speaking to a salesman about bad credit financing.

Why Choose Bad Credit Financing?

Some lenders aren’t willing to lend money to those with bad credit because they believe they are a financial risk. Fortunately, there are lenders out there who are willing to take a chance on drivers with bad credit, which can pave the way for financial success for these drivers in the future. Bad credit car loans allow those struggling with their credit to get approved for a loan in order to buy a better-equipped car for their travels. This results in these drivers being able to travel with greater peace of mind while also working to improve their credit score.

Bad credit financing gives borrowers the chance to boost their credit score by proving that they can responsibly pay back their auto loan on time and in full. By showing lenders that you can achieve this goal, you’ll be well on your way to qualifying for better loan terms and lower interest rates in the future. Showing credit bureaus that you have successfully made on-time payments and paid a loan off in full will, in turn, raise your credit score, which will then help you qualify for other high-priced assets, like a home or a better vehicle. You have to start somewhere, and bad credit financing is a great first step.

Setting Yourself up for Success When Financing a Vehicle

Step 1: Know Your Credit Score

It’s important to get a handle on your financial situation so that you don’t have to worry the next time you need to make a big purchase. Knowing your credit score is always recommended so that you understand how the system works and know how you can improve this score moving forward. Signing up for free credit monitoring is highly advised, as this service will show you all your debts, debt-to-income ratio, revolving credit utilization, and other helpful pieces of information. When you better understand your credit score, you’ll be able to make changes, as needed, to improve it, which is especially helpful before applying for an auto loan.

Step 2: Pay Down Debts

If you want to boost your chances of getting approved for better loan terms when shopping for a vehicle, try to pay down as many debts as possible. This includes credit card debts, which can affect your credit score, as credit utilization tends to get out of hand for many Americans. Trying to bring your revolving credit utilization below 30% can positively impact your credit score, so start picking at your debts as efficiently as you can. Once you become more knowledgeable about your credit score and various debts, it’s a good idea to figure out your budget to find a vehicle that fits within it. This means going through your monthly bills and coming up with what you can allot to a vehicle, and remember, this amount shouldn’t place a financial strain on you.

Step 3: Find a Vehicle Within Your Budget

The great thing about working with a dealership specializing in bad credit financing is that they can work on your budget with you, finding you the payment plan that works, as well as vehicles that fit within these parameters. The last thing you want to do is buy a vehicle you can’t afford, which can cause extreme financial strain, resulting in you being unable to make payments and damaging your credit score. Working with a team that’s experienced in this area will allow you to avoid making these mistakes because, after all, they want to see you succeed, too.

A bad credit financing loan application is shown on a blue clipboard.

Step 4: Save for a Down Payment

It’s a good idea to set some money aside to use for a down payment. This will help drive your monthly payments down and make them more affordable. You may also have a vehicle you’re looking to trade in, which will help reduce your monthly payment, making your loan terms more manageable. The key to success when you’re looking to finance a vehicle is to be prepared, and this includes gathering the necessary documents that will help with the approval process. You’ll want to be sure to have proof of employment, pay stubs, utility bills, and your identification handy to start the approval process and ensure that it’s successful.

Step 5: Partner with a Reputable Dealership

Finally, be sure to ask questions if you’re unsure about anything within the loan agreement. When you work with a respected team, they won’t hesitate to answer all of your questions because they want you to be well aware of all details of the process. This brings up the last point: partner with a dealership that specializes in bad credit financing so that you’re able to obtain the loan terms that work for you. You never want to get yourself into a situation where you can’t pay your auto loan because this can seriously damage your credit, and you’re working hard to get your credit back to where it belongs.

Buying a Car with Bad Credit

There are many drivers who are actively working on their credit, and they’re still traveling in vehicles that are reliable and safe. There’s no compromise when it comes to the safety of you and others on the road, and it all starts with a vehicle you can rely on. The notion of not being able to afford a quality vehicle when you have bad credit is a thing of the past, especially with all of the financing options available today. So, if your credit needs some work, take these helpful tips and put them into action. When you need a new car for your journey, remember that this is achievable with the helpful bad credit financing options available at trusted dealerships across the country.