How to get a car with bad credit

It’s not impossible to get a car loan with bad credit. Here’s what you need to know:

What is bad credit?

Bad credit is defined by your credit report, which is a snapshot of your borrowing history. If you’ve been negligent in paying your bills on time, creditors are more likely to decline your loan request.

People with a credit score below 660 (900 is a perfect score) are more likely to have problems securing credit.

You can access your credit information for free through credit bureaus such as Equifax or TransUnion.

Can I get a car with bad credit?

Yes. But interest rates on your loan will be higher because the lender is taking a risk on you.

How do I get a car loan now?

Here are our recommendations:

Establish a budget

Figure out what you can realistically spend on your new wheels every month, and factor in car insurance.

Gather your documents

You will need a driver’s license, proof of employment, bank statements and (possibly) a utility bill. These documents will verify your identity and prove you have enough regular income to make your monthly car payments on time.

Apply with a co-signer

Is there someone who trusts you, who has good credit, who will cosign your loan? This could go a long way in helping you get approved.

Make a down payment

The larger the payment, the less financing is needed.

If you have time, consider waiting. Credit reports are updated monthly, and if you’re diligent in paying your bills on time, eventually, you will see your scores improving.