Are you someone who thinks that you’ll have to drive a beater if you have bad credit? Well, it’s not true. Yes, it’s certainly possible for you to get an auto loan with bad credit. Because the financed vehicles serve as collateral, many car dealerships are willing to take on the risk of making bad credit auto loans to customers who have a low credit score. Read to know more about car dealers that accept bad credit.
Which credit score do car dealerships use?
Before requesting a loan, you should be current with your credit score. This way, you can estimate your loan amount, interest rate, period, and monthly payment before applying. Here are some factors that can influence a car dealer’s lending decisions:
- Defaults on debts associated with automobiles
- A limited credit history.
- Overdue payments on a car
- Automobile loan defaults, repossessions, and collections
- Insufficient utilization of other forms of credit
When car dealers lend you their finances, they will consider your credit score. It can be the commonly used FICO score. Or it could be Transunion CreditVision, designed for the prime and subprime car lending industry.
Some car dealership chains may use alternative scoring systems such as VantageScore because new systems are regularly introduced to provide the most pertinent, actionable information for an auto lender.
Car dealers that accept bad credit
You may choose one of these dealerships near you or anywhere in the country and get your car financed. Their websites allow you to pre-qualify before even setting foot on the lot.
DriveTime has more than 130 locations across the US and can help you get a loan even if you have bad credit. DriveTime has a proven track record of rapid approval, thanks to its 4 million auto loan transactions to date. The loan offer you receive will detail a down payment amount and monthly payment schedule that are within your means for a car within your pricing range.
Image from CarMax
CarMax, a network of over 200 dealers throughout the country recognized for its television ads, often approves loan applications from drivers with low or restricted credit. Carmax offers financing options, or you can shop around for a better rate. No matter what’s in your credit history, CarMax can work with you to purchase a car or help you refinance your current one.
Image from Carvana
Carvana is an industry leader in the no-contact car-buying process. Customers can browse online, apply for financing, and get their car delivered all from the comfort of their own homes. Carvana has its own in-house bad credit financing options, but it also lets you work with whatever lender you like. Finalizing your financing and arranging for vehicle delivery in as little as 10 minutes is possible.
Car dealers capable of matching you to lenders who accept bad credit
Auto Credit Express
Image from Auto Credit Express
Auto Credit Express has partnered with a vast network of dealerships across the country, so even if your credit is less than perfect, you may still get the car you want at a price you can afford. The brief loan request form used by them to determine loan eligibility can be completed in under a minute. If you’re approved, a local bad credit vehicle dealer may call you later that day to finalize the financing for your purchase.
LendingTree is one of the most extensive loan aggregators around, and it offers numerous competitive auto loan products in every state. Trustpilot gives it an excellent rating, and in just three simple steps, you can evaluate as many as five different loan options.
Car.Loan.Com auto loan collaborates with the largest network of automobile lots in the United States that offer subprime car loans. Subprime auto loan prequalification is a quick and easy process that will only take a few minutes of your time. You should expect a response from a direct subprime lender within minutes after prequalification, as the network is well-known for its promptness.
Loans for both new and pre-owned automobiles, as well as cash-out refinancing, are serviced by the myAutoLoan network. This service may get you up to four loan options from different auto lenders in only a few minutes. After carefully considering the terms of each proposal, you can accept or reject an offer.
What info is needed to fill out an auto loan application?
Your personal details (name, address, SSN, employment history, income, outstanding debts, etc.) will be requested. This data is cross-checked with the information they get through a soft pull of your credit history from one or more credit agencies during the prequalification process when working with a vehicle dealer network.
The dealer will make a hard inquiry and collect additional information after your prequalification is complete. The finance department of a lender will look at more than just your credit score when deciding whether or not to lend to you. They will also consider any defaults, write-offs, collections, repossessions, or bankruptcies you may have had in the past. These are not necessarily catastrophic, especially for secured debts like auto loans.
Do car dealerships approve bad credit?
Selling cars to customers with poor credit histories is typically the bread and butter of a bad credit car dealership. Your car’s worth makes getting a bad credit auto loan easy. The car dealer will resell the vehicle to someone else if you default on the payments. On the other hand, personal loan companies may only recoup a fraction of the original loan amount if you end up in default.
Lenders can mitigate some of the inherent danger in lending by repossessing vehicles for nonpayment, thanks to a lien placed on the title. The highlighted car lots and lending networks have the expertise to make decisions on bad credit vehicle financing transactions for a wide variety of lenders. Use a service like Auto Credit Express, LendingTree, Car.Loan.com, or myAutoLoan, and you’ll have access to a pool of lenders ready to work swiftly to secure the loan terms you require.
How can I improve my bad credit auto loan terms?
Finding a cosigner with excellent credit to be financially accountable for your missed payments is a simple approach to improving the terms of your subprime auto loan. The cosigner’s credit rating should be used to determine the terms of the loan.
A down payment or trade-in can also help you get a better interest rate on your auto loan. If you put up equity, you have more skin in the game, and the threat of losing it should encourage you to keep up with your payments.
You can get better interest rates and terms on loans by working to raise your credit score. Making on-time payments, maintaining your debt-to-income ratio below 28%, and cleaning up your credit record can help. A higher credit score will get you a lower interest rate on a car loan, whether you’re buying a used or new vehicle.
Bad credit auto loans are available from a wide variety of dealers around the United States. All you need is a little bit of focused research, and you can land on some of the best options. And know that lack of good credit should not stop you from getting the best finances for your car.
Can I get a car loan with a credit score under 500?
There is no magic credit score that will guarantee acceptance for a car loan, but a higher score will increase your chances of being granted financing. However, securing auto finance is still possible even if your credit score is in the “subprime” (501-600) or “deep subprime” (300-500) range, as defined by Experian.
What car company is best for bad credit?
There is no bank that’s particularly the best for bad credit. Here are some options for you.
- Best for shopping around: myAutoLoan.
- Best for buying a car online: Carvana.
- Best from a big bank: Capital One
- Best for refinancing: Autopay
- Best for used vehicle selection: CarMax
What car is easiest to get with bad credit?
Cars that were new on the market around 2018-2021 could get you an affordable car loan if you got bad credit. Recent releases can be tricky. This is applicable all almost all car brands.
What is the lowest credit score a dealership will accept?
A car loan approval is heavily dependent on your credit score. Specialized credit ratings, such as the FICO score, are used by some lenders. Prime credit, defined as a credit score of 661 or above, is required to qualify for the best lending rates.
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