How to Get an Auto Loan With Bad Credit

If you're shopping for your next vehicle but don't have the best credit, it can feel impossible to close a deal. Fortunately, there are auto loans for bad credit out there. However, you will likely pay a higher interest rate, be able to finance less, and may have to put more money down.

Our guide explains how to get an auto loan with bad credit. You'll also learn practical tips to help you boost your score, unlock more favorable rates, and save money over the life of your loan. 

How to get an auto loan with bad credit

Before applying, check your credit score and review your credit reports. Your report and score will give you a clear picture of where you stand. Identify any negative remarks and look for errors that could be impacting your score. 

Set a realistic budget

Use our auto loan calculator to estimate what you can afford. The more you put down, the less you'll need to finance and the lower your monthly payment will be.

Consider a cosigner

A cosigner with strong credit can improve your odds of approval and may help you qualify for a larger loan amount or better interest rates.

Shop lenders that work with bad credit

Some lenders specialize in working with borrowers who have lower scores. Look for credit unions or online lenders that have more flexibility. The impact of credit scores on auto loans varies by lender, so shopping around is essential.

Types of bad credit auto loans

Subprime auto loans

A subprime loan refers to any loan offered to borrowers with lower credit scores. These loans come with higher interest rates and potentially shorter terms.

Buy here, pay here financing

These dealerships offer in-house financing. They're more accessible but typically charge very high rates and may not report payments to the credit bureaus.

How to improve your credit before applying

Pay down existing debt to lower your credit utilization rate. Make all payments on time. Dispute any inaccuracies on your credit report. If you have time, use a platform like Kikoff to report positive payment activity and strengthen your profile. 

Build credit responsibly with Kikoff.