Vehicle Loans For Bad Credit: How To Get Approved

vehicle loans for bad credit

If you have bad credit, getting approved for a vehicle loan can be a challenge. However, it is still possible to get the financing you need to purchase a car. In this article, we will discuss the common problems faced by people with bad credit when trying to get a vehicle loan and how to solve them.

Problem: Bad Credit

The biggest obstacle to getting a vehicle loan is having bad credit. When you have a low credit score, lenders view you as a high-risk borrower. As a result, they are less likely to approve your loan application or will charge you higher interest rates.

Solution: Improve Your Credit Score

One solution is to improve your credit score before applying for a vehicle loan. Paying down debt, making payments on time, and disputing any errors on your credit report are all ways to boost your credit score. If you can wait to buy a car, taking the time to improve your credit score could save you thousands of dollars in interest payments over the life of your loan.

1. Know Your Credit Score

Before applying for a vehicle loan, check your credit score. This will give you an idea of what interest rates you can expect and help you avoid lenders who are likely to reject your application.

2. Consider a Co-Signer

If you have a family member or friend with good credit, consider asking them to co-sign your loan. This will improve your chances of getting approved and could result in a lower interest rate.

3. Save for a Larger Down Payment

A larger down payment can help offset your bad credit and make you a more attractive borrower. Aim to save at least 20% of the vehicle’s purchase price before applying for a loan.

4. Shop Around for the Best Rates

Don’t settle for the first loan offer you receive. Shop around and compare rates from multiple lenders to find the best deal.

5. Consider a Subprime Lender

If traditional lenders have rejected your application, consider working with a subprime lender who specializes in working with borrowers with bad credit. Keep in mind that subprime loans often come with higher interest rates and fees.

6. Avoid “Buy Here, Pay Here” Dealerships

While “buy here, pay here” dealerships may be willing to approve you for a loan regardless of your credit score, they often charge exorbitant interest rates and fees. Avoid these dealerships if possible.

Success Story

John had a credit score of 550 and was struggling to get approved for a vehicle loan. He decided to take a few months to improve his credit score by paying down debt and making all of his payments on time. When he applied for a loan again, his credit score had increased to 620. He was able to get approved for a loan with a 10% interest rate, which was much lower than the 20% he was offered before.


Can I get a vehicle loan with no credit history?

Yes, but it may be more difficult to get approved. Consider getting a co-signer or working with a subprime lender.

How much should I save for a down payment?

Aim to save at least 20% of the vehicle’s purchase price.

How long does it take to improve my credit score?

It depends on your current credit score and how much you can improve it. Generally, it takes several months to see a significant improvement.

Can I refinance my vehicle loan if my credit score improves?

Yes, refinancing your loan can be a good way to save money on interest payments if your credit score has improved.

What is a subprime loan?

A subprime loan is a loan made to a borrower with a low credit score. These loans often come with higher interest rates and fees.

Should I buy a new or used car with bad credit?

It depends on your budget and the interest rates you can get. In general, used cars are cheaper and may be a better option if you have bad credit.


– Improve your credit score before applying for a loan

– Save for a larger down payment

– Shop around for the best rates

– Consider a co-signer or subprime lender

– Avoid “buy here, pay here” dealerships


Getting a vehicle loan with bad credit can be a challenge, but it is still possible. Improving your credit score, saving for a larger down payment, and shopping around for the best rates can all help increase your chances of getting approved. Consider working with a co-signer or subprime lender if necessary, and avoid “buy here, pay here” dealerships if possible.