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Can you get a car loan with bad credit and is it worth it?

QuestionsCategory: Credit Score / ReportCan you get a car loan with bad credit and is it worth it?
Boyd G. asked 3 years ago

I am in a bad place financially: I lost my job last year and was forced to file for bankruptcy. Fortunately, I have recently found a new job, but I need to buy a car for the commute. Can you get a car loan with bad credit and is it worth it?

1 Answers
Neal M. answered 3 years ago

Getting a new line of credit when you have bad credit is always going to be a challenge. Fortunately, lenders are a little more flexible when it comes to auto loans. According to CarFax, “only about 1 in 10 people have enough money on hand to pay cash for a new vehicle, thus automotive financing is available for both new and used vehicle shoppers”. This means that you’re not alone and you don’t need to have a perfect credit score to get a car loan.

In order to get approved for an auto loan, a lender will pull your credit score to judge your creditworthiness. The auto loan credit score range for your FICO score is 250-900 (the higher, the better). Determining what a “good” score is within this range can be tricky. This is because different lenders and different car loans are not created equally. To start with, individual lenders decide their criteria for loan approval which means a score of 640 might be sufficient for one lender but not for another. Therefore, when looking to borrow you should approach the investment as an individual consumer as that is how lenders approach it as well.

Be aware that advertised rates for auto loans are generally only available for people with excellent credit. That doesn’t mean you won’t get approved, it simply means you most likely will not be offered the most competitive rates. For example, if you have poor credit within the range of 501-600 you can get approved for a subprime loan if you can find a lender who will underwrite it. However, according to, you will be charged interest rates that are 3-5 times higher than a regular loan for a person with excellent credit.

Now that you understand the implications of getting a car loan with bad credit, is it worth it? As long as you can make every monthly payment in full and on time, and if you can put down a big down payment, there is no reason why you should not get a car. Just keep in mind that used cars are cheaper than new cars and they will cause you less financial stress.