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You may be able to get a car loan with bad credit, but you’ll want to carefully weigh the costs. If you need a car loan but have less-than-perfect credit, your financing terms may be expensive. Lenders use credit scores to estimate the likelihood you’ll pay back your loan — the lower your scores, the more risk they believe they’re taking on. In exchange for that risk, lenders will usually charge a higher interest rate. For example, someone with subprime credit (which Experian defines as scores of 501 to 600) received an average rate of 11.33% for a new vehicle and 17.78% for a used one in the second quarter of 2021, according to an Experian report. By comparison, the average interest rate on a 60-month new-car loan was 5.14% during that same period, according to the Federal Reserve. We’ll look at some steps you can take to shop for an auto loan that may help lower the cost of financing a vehicle, as well as review our picks for auto lenders that offer car loans for bad credit. How can I get financed for a car with bad credit? These steps could help you improve your chances of getting approved for a car loan that fits your budget. Check your credit Before you begin shopping for a car loan, check your credit. Review your credit reports for any incorrect information and dispute those errors. Inaccuracies could lower your credit scores and hurt your ability to qualify for a loan. Checking your credit can also help set your expectations before you start looking for a loan. You can check your Equifax and TransUnion credit reports for free on Credit Karma or request one free credit report from each credit bureau per year at annualcreditreport.com. If you don’t need a new car right away, taking some time to build your credit could pay off — you may be able to qualify for a lower interest rate that could save you thousands on your auto loan. But if you can’t wait, you may want to consider asking a family member or close friend to be a co-signer. A co-signer with good credit could give you a better chance of getting approved for a loan or may help you get a better loan rate and terms. Save for a down payment Saving for a down payment can come with several benefits. First, a down payment may help you qualify for an auto loan more easily, especially if you have a low credit score. Without a down payment, the lender takes on more risk since it may lose more money if you don’t repay the loan and it needs to repossess the car. In fact, some lenders may require you to put some money down. Plus, you’ll pay less interest with a down payment. The more money you put down, the less you’ll need to borrow for the car. That means you’ll pay interest on a smaller balance, lowering your total interest paid. You may also get a lower interest rate if you make a down payment. Lenders consider your loan-to-value ratio — your loan amount versus the value of the vehicle — when setting your interest rate. Determine how much you can afford Think beyond your monthly loan payment as you figure out how much you can afford to borrow. Consider the costs of car ownership — such as fuel, regular maintenance, auto insurance, and any parking expenses or property taxes — and factor them into your budget. It may be tempting to stretch your loan term to six or seven years in exchange for a lower monthly payment. But keep in mind that a longer loan term means you could end up paying more in interest over the length of the loan — and you increase your risk of becoming upside down on your loan, which can create some challenges when it’s time to sell or trade in your car because you’ll owe more than it’s worth. Our auto loan calculator can help you estimate how much you’d pay in interest on a car loan. Shop with different lenders Shopping around and comparing rates and loan terms across lenders may help you find the best loan for your needs and your budget. If you have bad credit, here are some lenders you might consider. Your current bank or credit union — If you already have a relationship with a bank or credit union, that can be a good place to start. Online lenders — Some online lenders and lending platforms specialize in car loans for people with bad credit. They may also allow you to apply for prequalification directly on their websites. If you’re prequalified, you’ll be able to see the estimated loan rate and terms you may qualify for. Just keep in mind that prequalification isn’t a guarantee you’ll be approved for the loan or the estimated loan terms. Car dealerships — Dealerships typically have relationships with a number of banks and finance companies, which means they may be able to find a lender in their network that will approve you for a loan. Some dealerships also have special financing departments that are dedicated to helping people with poor credit. Buy-here, pay-here dealerships — If you can’t get approved for an auto loan anywhere else and you need a car, a buy-here, pay-here dealership could be an option — but consider it a last resort. These “no credit check” dealerships offer their own loans to people with bad credit — and their interest rates tend to be higher than those offered by banks and other lenders. To minimize the impact that shopping for an auto loan can have on your credit, it’s a good idea to shop for rates within the same time period. FICO scoring models count multiple credit inquiries of the same type within a 45-day period as a single inquiry. VantageScore counts multiple inquiries within a 14-day period as a single inquiry. Keep in mind each time your credit is ran by a lender an average of 5 points are deducted from your credit score. These points will be removed within 18 months. Can I get a car loan with a 500 credit score? It’s possible to get a car loan with a credit score of 500, but it’ll cost you. People with credit scores of 500 or lower received an average rate of 13.97% for new-car loans and 20.67% for used-car loans in the second quarter of 2021, according to the Experian State of the Automotive Finance Market report. That’s a big difference from the loan rates for people with credit scores of 661 to 780 (considered prime) — they received average rates of 4.21% for new-car loans and 6.05% for used-car loans. Getting a car loan with a credit score of 500 could be tough, too. The Experian report shows that only 0.37% of new-car loans and 4.35% of used-car loans issued in the fourth quarter of 2019 went to people with credit scores of 500 or lower. Best car loans for bad credit Here are some of our picks for lenders that offer car loans for bad credit around you right now. Good for people who have filed bankruptcy: EZPAY CARS In general, bankruptcies in your credit history can affect your ability to get approved for an auto loan. But EZPAY CARS considers applicants who have filed for bankruptcy in the past — as long as the bankruptcy has been discharged. Next steps Car loans for bad credit are out there, but they can be expensive. Taking steps to improve your credit before car shopping can lessen some of the financial burden. If you’re unable to delay your car purchase, consider buying a lower-priced, but reliable, used vehicle that meets your needs but requires you to borrow less. As you pay down your loan and work on improving your credit, you may be able to refinance for a better rate down the road.

What To Look For When Buying A Used Car Buying a used car can be a good option when you're looking for a quality vehicle without the higher price tag. While a used car can be a sensible option, buyers still need to make smart choices. There's a lot to look for when buying a used vehicle, but here are some ways to help you choose the right car for you. INSPECT THE CAR'S EXTERIOR AND INTERIOR Inspect both the outside and inside of the vehicle. Look over the exterior of the vehicle, says CARFAX, checking for scratches, dents and rust. You probably don't need to be worried about small dings or scratches, but larger areas of damage may be cause for concern. CARFAX also recommends checking to see that body panels line up evenly, as uneven panels may indicate the vehicle was in an accident but not repaired well. It's also a good idea to open and close the doors, hood and trunk to see how easily they move. Kelley Blue Book (KBB) suggests checking for paint overspray on the inside of the hood, trunk and doors and to be sure the color of the vehicle matches on all parts. If you notice overspray or mismatched paint, that part was likely repaired and repainted. Inspect the interior by sitting in all the seats and looking for unusual wear and tear in the upholstery, says CARFAX. If the interior of the car smells musty, check the carpet and floor mats for signs of a a leak or water damage. GO FOR A TEST DRIVE Going for a test drive can help you determine the condition of the car and whether it's a good fit for you, according to Edmunds. You may want to turn the key to the "accessory" position before starting the engine, says KBB. You should see all the dashboard warning lights go on. If they do not light up, or stay on when you turn the ignition, make sure the issue is inspected. When you start the engine, KBB recommends listening for tapping and clicking sounds, which could indicate a problem. While on a test drive, keep your eyes and ears open. CARFAX suggests driving the car on different types of roads and at varying speeds to see if the transmission shifts smoothly. Make sure to note any unusual engine or brake noises, and whether all of the electronics in the car are working properly. Also, be sure the brakes work properly and do not pull the car to one side, says CARFAX. Get Pre-Approved Get Today's Specials Value Your Trade IS LOW MILEAGE ON A USED CAR BETTER? Low-mileage used cars can certainly be appealing, but it doesn't necessarily make them a great deal. Low mileage can certainly mean less wear and tear and a longer life. However, if a car is driven infrequently, AutoTrader says that the plastic and rubber parts on the vehicle may dry out and get brittle. It's also better for the drivetrain when the vehicle is used consistently. You may end up with a vehicle that needs a lot of repairs and reconditioning, says AutoTrader; which could cost you more in the long run. It's smart to check the mileage on a used vehicle, but keep in mind that how the vehicle has been maintained and used may be more important that what the odometer says. CHECK FOR LEAKS Any car leaking fluids is generally a red flag for a needed repair. Check under the car to see if there's any fluid leaking, says CARFAX. Black fluid might be an indicator of leaking oil, while green, yellow or pink fluid may indicate a leak in antifreeze and reddish fluid could be a leak in the transmission or power-steering fluid, says Cars.com. DETERMINE A FAIR PURCHASE PRICE To help ensure you're being charged a fair price, make sure to compare prices for the same make, model and year with several sources. Checking and dealer prices can simply be done online. There are a number of online tools you can use to compare prices, including KBB and National Automobile Dealers Association Guides. Even though condition and mileage will play a role in price, you can still get a ballpark figure of the vehicle's market value. DO YOUR RESEARCH There's a lot of information online that can help you check on a particular vehicle's history as well as whether there are any recalls on it. LOOK UP THE VIN The Vehicle Identification Number, or VIN, can reveal a lot about a car. Checking a VIN decoder chart is a quick way to see if a used car's VIN information matches up with what's in the vehicle title and records, according to Edmunds. There are a number of VIN decoders available online, including one from the National Highway Traffic Safety Administration (NHTSA).The VIN can also be used to see if there are any recalls on the vehicle. You can look up a vehicle by VIN on the NHTSA's Safety Issues and Recalls page to see if the vehicle needs repairs due to a safety recall. Keep in mind, however, that there may not be information on an older vehicle, any non safety-related recalls or recently announced recalls. Certain brands and international vehicles may also not be listed. Get Pre-Approved Get Today's Specials Value Your Trade REVIEW THE VEHICLE HISTORY REPORT A vehicle history report can help you see title problems, ownership history, service points and previous accidents, says KBB. You can get a vehicle history report online for a fee by entering the VIN or license plate number, says Edmunds. If you're buying through a dealer, though, they may provide a history report for free. CONSIDER A CERTIFIED PRE-OWNED VEHICLE Purchasing a Certified Pre-Owned (CPO) car can be a wise choice because it usually offers the buyer an extra level of quality assurance. KBB states that each manufacturer has different standards for CPO vehicles, but they're typically less than five years old and have less than 75,000 miles on them. Generally, the dealer has checked all major systems and reconditioned the vehicle. Many dealers also offer these vehicles with warranties. You can find a great deal on a quality pre-owned used car at Wallace Auto Group located in beautiful South Florida in Stuart, Florida. Just minutes down I95 highway off exit 101. They have been proudly serving the Treasure Coast and surrounding areas for over 45 years with New & Used cars. Get Pre-Approved Get Today's Specials Value Your Trade