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How to Get a Car Loan With Bad Credit

Updated on April 23, 2019
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In light of the past and possibly upcoming credit crisis, many people are finding it more difficult than ever to qualify for a car loan – especially those who suffer from bad credit.

Lenders look to your credit history and credit score to determine how responsible you’ve been with your money and how safe you are to lend to.

While many people suffer from circumstances beyond their control, it’s still very frustrating to be denied for a car loan when you need to find an economical and safe vehicle for your family.

Luckily, there are ways to get a car loan with bad credit. Consider the following options if you’re in search of a new car.

Find a Cosigner

The quickest and most effective way to get approval for a car is to get a cosigner. This person should have good credit and be able to qualify for the loan without you.

They can then sign for the note stating that they’ll be held responsible if you aren’t making payments on the car.

While this sounds easy enough, it can be difficult to find someone who will vouch for your bills if you default.

However, if you can prove that you’ve cleaned up your act and have sufficient funds to make your payments, you can quickly get into the vehicle of your choice.

Consider Buy Here, Pay Here Lots

Many car lots offer “buy here” financing, meaning that they privately finance cars for people who can’t qualify with a bank or lender.

In most cases, these companies won’t even check your credit – you simply provide proof of stable work history and residency and you can get a car.

You’ll usually need to provide a down payment for the car you choose, which can vary from a few hundred dollars to a few thousand.

You may also be required to pay weekly or monthly for your car payments so the company knows immediately if you aren’t financially sound.

Most of these lenders can structure your payment due dates to match up with your paydays, making it easier for you to stay on top of your responsibilities.

Rent-to-Own Is an Option

Many car lots are now offering rent-to-own financing. In this situation, the car lot allows you to pay a down payment and the first payment, and drive a car off the lot with no questions asked.

The car lot will retain ownership of the vehicle until the final payment is made, and if you default on one payment, you lose your entire investment.

However, because the car lot retains ownership, they’ll be responsible for paying all the taxes, fees, and registration costs until the vehicle is paid in full.

This can save you money if you’ll be paying the car out over a few years or if you can’t afford to pay the sales tax charged when you buy a vehicle outright.


As you can see, all hope isn’t lost if you have bad credit and need to find a new car. By shopping around and checking out local car lots, you may find many more opportunities than you ever knew existed.

Even if you’ve been turned down at one lot, don’t give up hope – check around until you find a dealership that’s willing to work with you.


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