Yes, you can get a car loan with bad credit. Lenders approve auto loans across every credit tier, from scores under 500 all the way up to 850, according to Experian’s Q2 2026 auto finance data. The rate you get and the car you can actually afford will look different than someone with prime credit, but bad credit does not mean no options. As of September 2026, the average new car loan carries about a 7.00% APR on a 60-month term, and buyers with weaker credit typically pay more than that average, not less.
What actually moves the needle is showing up prepared: knowing your real credit score, shopping more than one lender, and using this loan as a chance to start rebuilding your credit so the next one costs you less. Some credit building apps can speed that rebuild up. You just need to know where to look, and that starts with the steps below.
Steps to Take Before Applying For a Car Loan
If you’re among the many people with bad credit, you might feel like getting a car loan is impossible. But it’s not! Here are 5 steps to take before applying for a car loan with bad credit:
1. Check Your Credit Report and Score.
This is the first step you should always take when trying to get a loan, regardless of your credit situation. Knowing what’s on your credit report and what your score is will give you a good idea of where you stand and what kind of loan terms you can expect. FICO puts scores under 580 in the “Poor” tier, 580 to 669 in “Fair,” and lenders start easing up meaningfully once you clear 670 (“Good”). If you’re sitting in the Fair range, you can still get approved for a car loan, just expect a higher rate until you climb higher. Never be complacent. Always find ways to build your credit. Knowing which credit building apps actually move your score is also a helpful way to ensure that your credit score is suitable for taking out any loans.
2. Assess your Income and Debt.
In order to get approved for a loan, lenders will want to see that you have the ability to repay it. Take a look at your income and debts to get an idea of what kind of monthly car payment you can afford. It would be best that before shopping for a new car, try to pay off some debt first. It will make the system see your creditworthiness. If they can see that you try your best to repay your debts even with some difficulties, they might grant you a loan.
3. Prove Personal Stability.
If you want to try your hand at traditional lenders, then one of the first things you should look into is your employment history. Next time you start a new job, learn how to start it the right way.
Take note that having a history of jumping from one job to another is a big red flag for most companies. This is because they’ll always be questioning whether or not you’ll be able to sustain this job and if not, how will you handle your repayments?
Lenders like to see that you have a stable job and place of residence. If you’ve been at your job for a long time and/or have lived at your current address for several years, this will work in your favor when applying for a car loan with bad credit.
An excellent employment record will give the lenders an overview of your capability and your reputation, both in staying to fulfill a job responsibility and in fulfilling your financial commitments.
4. Residency.
The length of time you’ve lived in an area or multiple areas is a big deal as well. If you’re the type to move addresses every six months then you might not be considered. The less likely you are to stay put, the higher risk for them.
Jumping from one place to the next is a bit shady. Lenders and other financial institutions consider it not normal to establish a place of residence only to leave it in a few months, you’re evading something, and it’s questionable.
5. Consider a Co-Signer.
One of the easiest ways to secure bad credit car financing is by getting a co-signer with good credit to go on your application. Whether it’s a parent, partner, or spouse, your chances of securing a car lease will drastically increase.
This is because, on paper, someone else’s assets and income are combined with yours during the qualification process.
So if there’s someone you trust and trusts you enough to be a co-borrower, you’re going to want to talk to them about this. Chances are, you’ll even get better interest rates.
If you have bad credit, you may not be approved for a loan on your own. But if you have a close friend or family member with good credit who is willing to co-sign for the loan, you may be able to get approved. Just keep in mind that if you default on the loan, your co-signer will be responsible for repaying it.
6. Consider a Down Payment is Key.
If you have bad credit, one of the best things you can do when applying for a car loan is to put down a large down payment. Lenders like to see that you’re invested in the loan and are less likely to default if you’ve already put some of your own money towards it.
If you’re bent on getting a car. You need to realize that it’s not about to happen with a flick of a finger. You may need to save some cash every month for a down payment to help you qualify for better terms. Whatever you do, avoid using your current car as leverage for one of these purchases; car title loans come with steep fees and the real risk of losing the vehicle you already own.
7. Know How Much You Can Afford.
It’s important to have a budget in mind before shopping around and comparing auto loans. Know how much you can afford to spend on a car payment each month, as well as how much you can afford to put down as a down payment. This will help you narrow down your choices and avoid getting in over your head financially.
8. Build Your Savings.
If you want to increase your approval rate with lenders, make sure that you have some money in your account. To investigate your income and expenses, financing institutions would ask you for (typically) the last 3 months’ bank statements.
Now if you only have $300 in savings in your account, that might be taken against you. This is because of the assumption that people who don’t have padded savings might not be able to fulfill their repayments during emergencies.
But if you have a few thousand in your account, especially over the last three months, you’re more likely to be considered even with poor credit standing or lower-income because you have that safety net in case of emergencies.
Short on cash for the down payment right now? A handful of the best cash advance apps can cover a small gap without a hard credit pull, so you’re not tempted to skip the down payment step entirely.
How to Shop for Car Loans With Bad Credit
If you have bad credit, you may be wondering how you can get a car loan. Here are a few things to keep in mind when shopping for a car loan with bad credit:
1. Shop Online.
The internet has made it easier than ever to find the best deals on car loans. There are a number of websites that specialize in helping people with bad credit get the financing they need. As of September 2026, the average new car loan rate is running about 7.00% APR on a 60-month term, according to Bankrate’s weekly lender survey, and used car rates typically run higher. Cox Automotive puts the average new car price at $50,089 and the average used car listing price at $27,239 as of August 2026, so a used car with a shorter loan term is usually the cheaper path while your credit recovers. Shop around to get the best deal, and you can also refinance later on if you need to by using the best auto refinance lenders.
2. Go To Your Bank.
If you have a bank that you have a good relationship with, it’s worth considering getting your loan through them. They may be more willing to work with you than other financial institutions.
3. Consider A Credit Union.
Credit unions are another option to explore when looking for a car loan with bad credit. Because they are non-profit organizations, they may be more willing to work with you and offer lower interest rates.
3. Getting a Loan at the Dealership.
Some dealerships offer in-house financing, which may be an option if you have bad credit. However, it’s important to be aware that the interest rates on these loans are often high. You should also be aware of any hidden fees or terms that could make the loan more expensive than it initially appears.
Related: How to Buy From a Dealership and Avoid Car Dealer Tricks
4. Private Sellers.
If you’re considering buying a car from a private seller, you may be able to get financing through a personal loan or a short-term loan. This can be a good option if you have bad credit, but it’s important to shop around for the best rates. If you’re not sure a personal loan is even the right tool here, our personal loans guide walks through how they compare to the full range of consumer loans available to you.
Car Loans With Bad Credit FAQs
Yes. Lenders approve auto loans across every credit tier, according to Experian’s Q2 2026 auto finance data, but your rate will sit above the roughly 7.00% APR average on a 60-month new car loan. Start with our best bad credit loans roundup to see which lenders work with lower scores, and read our guide to getting a loan with a score under 600 before you apply.
It is possible but expensive. Lenders take a bigger risk on a subprime borrower with nothing down, so the rate climbs. A co-signer with good credit, a credit union, or a cheaper used car on a shorter term all improve your odds. If you are a few hundred dollars short of a down payment, one of the best cash advance apps can cover the gap without a hard credit pull. Avoid car title loans, which risk the vehicle you already own.
Usually it is harder to lease than to buy with bad credit, because leasing companies want fair to good credit and a lease has less collateral for them. Expect a larger drive-off payment, a higher money factor, or a co-signer requirement. If a lease is turned down, a used car loan from a credit union is often the more realistic path while your score recovers.
Yes, especially after six to twelve months of on-time payments, since the original loan already established that history. Refinancing replaces your current loan with a cheaper one and can lower the monthly payment. Compare offers using our best auto refinance lenders guide, and check your credit score range first so you know which lenders will realistically approve you.
Check your credit report for errors, save a larger down payment, and apply at a credit union rather than a dealership that leads with in-house financing. A used car on a shorter loan term keeps the total cost down. Then work on your score with the best credit building apps and our guide on how to improve your credit score so your next loan costs less.
Conclusion
Like most people, there comes a point in your life when everything seems to be going wrong. Whether it’s a divorce, getting laid off from a job, a failed business, or sickness in the family, the sad reality is that most of us aren’t prepared for a big crisis.
When plights of life strike, one of the first tangible aspects of life they hit are our financial health. For most people, it’s not just about needing to adjust to a smaller budget. It’s about suddenly not being able to make a loan to alleviate the financial loss, not being able to get a car for your job, or even not being able to move to a new home or even an apartment — all because of a negatively impacted credit score.
While bad credit history doesn’t equate to you having a poor work ethic or being irresponsible with finances, banks and most other traditional lenders would rather not take the risk. The truth of the matter is that the world of financing (for vehicles, personal loans, or otherwise) is still a statistics game.
Statistically, people with bad credit are bigger-risk borrowers. This is why you’re having difficulty in getting an auto loan from a dealership or a car loan from the bank.
While people would typically say it’s a bad idea to even think about big-ticket purchases like cars or getting into auto loan agreements when your credit standing is poor, sometimes you just need a car to get back up on your feet, or to get to that new job cross-state, or even to (actually) start improving your credit rating.
But when banks and traditional lenders won’t let you, the ideas above should have helped you. This article should have helped you answer the question of how to get a car loan with bad credit.
Ready to see your real options? Start with our best bad credit loans roundup, then put the savings toward rebuilding your score with one of the best credit building apps so your next loan costs less.
