How to Get a Car Loan with Bad Credit (2024)

FAQs

Can I get an auto loan with a 550 credit score? ›

While you technically can get approved for a loan with a 550 credit score, you'll likely face more challenges and pay significantly more for the loan than if your score was higher. Most lenders won't consider borrowers with scores less than 580 – but you may still be able to find one if you know where to look.

Lenders may accept borrowers with a 500 credit score but expect you to meet additional criteria, such as a minimum income or employment history. Look into fees and interest rates. Ask about fees and interest rates you might pay if you get a loan.

Most used auto loans go to borrowers with minimum credit scores of at least 675. For new auto loans, most borrowers have scores of around 730. The minimum credit score needed for a new car may be around 600, but those with excellent credit often get lower rates and lower monthly payments.

It's possible to get a car loan with a credit score of 500, but it'll cost you. People with credit scores of 500 or lower received an average rate of 14.08% for new-car loans and 21.32% for used-car loans in the first quarter of 2023, according to the Experian State of the Automotive Finance Market report.

This allows them to look at your history from the past seven years and see whether you've typically made payments on time. For a $30,000 loan, you'll typically need a credit score above 600 just to qualify or above 700 to get a competitive rate.

Car finance and credit scoring

There isn't a minimum credit score required to get car finance – it depends on the lender and the type of finance you go for.

Hardship personal loans are a type of personal loan intended to help borrowers overcome financial difficulties such as job loss, medical emergencies, or home repairs. Hardship personal loan programs are often offered by small banks and credit unions.

Getting a personal loan with a co-signer that has a strong credit score and a solid income can boost your application. Your co-signer – ideally, a family member or close friend – will apply alongside you, and you'll both be responsible for repayment of the loan.

What Credit Score Do You Need To Get A Car Loan? Many lenders require a credit score above 650 to get a standard car loan. However, if you have a credit score of 550, 480 or even lower, and the bank or dealership denies your application, it is still possible to get a car loan.

How fast will a car loan raise my credit score? ›

There's no set time frame for how long it takes a car loan to improve your credit score. After buying a car, you can expect to see your score improve after making monthly payments on time and paying down your loan balance.

While achieving a CIBIL Score of 900 is technically possible, it is extremely rare. Scores above 760 are considered very good or exceptional, providing significant benefits such as lower interest rates and higher chances of loan approval.

If you're considering a car that costs $25,000, putting down between $2,000 and $4,000 would be wise. However, the true answer to this question depends on your negotiation strategy. If you can negotiate a lower price or better terms, putting more money down may not save you much interest.

We complete a hard inquiry into your credit history during the purchase process.

So how much of a down payment should you save up for a car with bad credit? Ideally, 10% plus whatever you can afford on top of that. One of the best ways to save up a few extra thousand dollars to put towards your down payment is to trade in your old car to us for credit.

You can borrow anywhere from a few thousand dollars to $100,000+ with a 550 credit score. The exact amount of money you will get depends on other factors besides your credit score, such as your income, your employment status, the type of loan you get, and even the lender.

It is 150 points away from being a “good” credit score, which many people use as a benchmark, and 90 points from being “fair.” A 550 credit score won't knock any lenders' socks off, but it shouldn't completely prevent you from being approved for a credit card or loan, either.

However, most lenders look for a threshold of at least 600. However, this may vary depending on the lender, car, and loan type. A score of 700-850 is what most lenders consider ideal. Borrowers in this range can expect to get offered lower interest rates and more flexible loan terms.