Getting an auto loan with bad credit is a long and arduous process. And it will depend on what your credit score is as to whether or not you will be able to even apply for one. Typically bad credit auto loans are for those in the credit range of 570 to 670. Above that and you qualify for prime interest rates and don’t even have to consider a bad credit auto loan. Below that and no one will even give you a second glance without a cosigner.
Most people who are looking for an auto loan for people with bad credit have already had a previous car loan which they didn’t pay and had their vehicle repossessed or just have a weak credit score and can’t qualify for a normal car loan. Or it’s possible that you had a recent bankruptcy. Whatever the reason you need to see what your current credit score is. You check this at one of the several online credit reporting agencies. As long as it’s still above 570 you probably won’t have to get a cosigner but one is always an option if you want to get a better rate.
Most banks and credit unions offer bad credit auto loan programs with competitive rates. You will of course have to pay higher interest rates than those with good credit but such is the price you pay. There are also many dealerships out there that offer their own loans depending on your situation. You may have better luck with a certain dealership then with your bank. In fact some dealerships let you get a loan without even checking credit scores. But you can bet on paying interest rates above 20%.
In many cases just waiting until you can improve your credit will help you save thousands of dollars. You will have a much easier time getting a auto loan with a credit score above 600 then if you go ahead and get one now with your low credit score. Following a few simple credit repair tips can improve your credit score drastically even within a few months. I think people forget that having a car is a privilege and not a God-given right. Many people can get by using public transportation or carpooling for that period of time. It can be worth it to save several thousand dollars over time.
Tips For Getting A Bad Credit Auto Loan
- You should try to be at your job for at least six months or more before you apply for a bad credit auto loan. The longer the better. Banks tend to look favorably upon steady employment.
- You also need to have above $1800 a month in income before you can even think of getting an auto loan for those with bad credit. That is if you don’t wont to be rejected on the spot. Over $3000 a month is generally a good average.
- Try to put down 20% if at all possible. The reasoning for this is that your car will go down in value by 20% within the first year. The don’t put anything down you will be at 20% upside after only the first year and you never want to be on the up side of a car loan. Because if you have to trade in for another car you will only lose money.
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