Image of an approved car loan application for someone with a low credit score.

Great Car Loans With Poor Credit

If you’re here reading this there’s a good chance you know your credit score is poor. But just because you may have “bad” credit doesn’t mean you can’t get a car loan with great terms.  How can you get a great car loan with bad credit? We’ll give you some tips to help you secure financing that will work for you now – and in the future.

We can’t guarantee you these tips will get you in a new Mercedes Benz. But if you follow our advice, you will be able to find the best loan available to you at this moment – and that may put you in the car you’ve had your eye on.

Tips to Get The Best Car Loan With Poor Credit

  1. Know Thy Score

First off, you should have a good understanding of what your credit score is. If you don’t know, consider going to and setting up account. In addition to giving you free access to your credit score from both Experian and TransUnion, the site will help identify ways you can improve your credit score over time.

Now that you know your credit score and know what you’re dealing with, let’s start looking at how to get you a good car loan.

  1. Take A Look Around

Once you know your credit score, this is your next step. You need to take a look at several banks and lenders to see what their offers are. This is imperative if you want to get a good rate on that borrowed money. If you have a higher credit score, you may find the loan rate is in the 4% – 5% range. While those lenders providing money to the subprime market are offering interest rates at 10% and above. Even if you have challenged credit, you should look around and compare. Don’t go into the process with the quick needs of “I just need to get a car loan”. There are deals to be found – but you have to be willing to look. In other words, don’t settle.

  1. You Know What They Say About Assuming

Just because someone tells you that you have poor credit, don’t take their word for it. Remember what we recommended you do BEFORE you even start reviewing lenders offers. Get a copy of your credit report (from services such as CreditKarma) and know what you’re working with beforehand.

  1. Expect More

A lot of people fall into the trap of believing they won’t qualify for a prime or near-prime car loan because they had to take a subprime mortgage for their home. But that often isn’t the case. Because car loans typically involve much less money and a much shorter loan period, your credit score may not be an issue for your car loan. Don’t sell yourself short and only look at the sub-prime market when you could qualify for a loan from another lender at a much lower rate.

  1. Stick Close to Home

Even if you don’t expect to get approved, your first stop should be your own bank or credit union. You can also ask your employer or your current insurance company if they offer car financing. Often many do and will be able to get you a better rate than you’ll find on the street. Either way, working with lenders you have a pre-existing relationship can often help you end up with much better loan terms than going outside your own network.

  1. Focus On The Right Lenders

Just because you have a challenged credit profile doesn’t mean you should just look to lenders who focus on sub-prime load and clients with low credit scores. Instead, focus your research on lenders who deal primarily with car loans. Large national banks as well as local ones and online lenders who deal with car loans can often provide better rates to you than the hard money lender down the street.

  1. Good Cop Bad Cop

Bring a friend, spouse or relative when you go to speak with the lender. Having their eyes and ears in the room will help keep your lender honest. And, the two of you can roleplay while meeting with the lender, with you cohort showing doubt and criticism of the loan terms you can make the lender work harder to sweeten the deal and get you better overall loan terms.

  1. Time Is Money

Remember, you’re looking to spend the least amount of money – period. A lot of lenders can meet your monthly payment budget by stretching the loan of a longer term – but that just means more interest you’ll be paying. Play it smart – if you can’t get to your budget number with a standard length term, you may have to accept that you’re looking to buy more car than you can really afford – and that is NEVER a good plan where your credit is concerned.

  1. Keep Your Eyes On Add Ons

It’s not uncommon for those looking to get a loan from sub-prime lenders to find their lending agreement overloaded with services and fees that aren’t necessary. Extended warranties, after market services and insurance are all typical add-ons that lenders include to bloat the loan rate – don’t go for it. If there are additional fees/services attached to the loan the lender won’t remove then walk away from the deal and be glad you did.

  1. Get The Terms Set

If you choose to finance your vehicle purchase through a dealer be very careful to verify the terms are final and not conditional before you sign. As much as you might be excited to drive away, remember you are signing a legal agreement that you’ll be bound to. If you accept conditional terms, your dealer may increase your rates at any time. Make sure your monthly payment can’t be raised or you may fall victim to a “yo yo” scam  some unscrupulous lenders are known to use.