5 Tactics for Getting a Used Auto Loan on Bad Credit

You can get a used auto loan with bad credit but make the best deal for yourself. There are several tactics you can use to gain some control in financing a used car even if your credit history has blemishes on it.

Know and Improve Your Credit Score

For almost any credit score you have, someone will lend to you. But the lower your credit score, the higher interest you will pay and the more restrictive the terms of the loan will be.

First, you are entitled to one free look at your credit score each year. Your credit history is tracked by the U.S.‘s three primary credit bureaus, Experian, TransUnion and Equifax. Even if you’ve used your free request, purchasing your credit score is not expensive. Know what the lender is looking at before you apply for a used auto loan with bad credit.

Improving your score cannot be done quickly. By seeing your credit report, you will know what has contributed to your having bad credit and you can begin to address. Simple steps can help.

  • Pay bills on time.
  • If you’re behind, get current.
  • Don’t ignore closed accounts with unpaid balances.
  • Settle with collections agencies.

The easiest way to borrow with bad credit is to improve your credit score.

Begin with What You Can Afford

When trying to secure a used auto loan with bad credit, many people overlook an obvious problem. They are trying to buy too much car. You credit score affects your ability to borrow more the more you are trying to borrow. In other words, it is easier to find a lender for a car than it is for a house. It is easier to find a lender for a less expensive car than a more expensive car.

Find out from a bank, credit union or auto dealer what they are willing to lend you, then find a car that fits that amount. 

Increase Your Down Payment

There are many reasons the “borrow what you can afford” tactic might not be a good one for you. You might need a better car for your business. You might not want the repair bills of older model. 

You can get a used auto loan with your bad credit at the amount you can afford and still upgrade the car you get by increasing your down payment. There is a cost for having bad credit, but it might be as simple a cost as taking time to save a few hundred dollars more.

Get a Co-Signer

If a friend or relative with good credit is willing to co-sign a note with you and they have good credit, you can get a used auto loan with bad credit. It is their score that will count for the loan application. An added benefit is your name will still be on the loan so if you make payments you will be improving your credit score as you enjoy the car you want.

Get a Bad Credit Loan

The last tactic for getting a used auto loan with bad credit is the simplest and the one you should avoid if possible. Many used car dealers target bad credit borrowers. If you can demonstrate means to pay, often that only means having a job, the dealer will loan you money and put you in a car. The downside is this will be a high-interest, short-term loan.


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