How do you get a car loan with bad credit?

You can get a car loan with bad credit, but expect a higher interest rate. Improving your chances means checking your credit report for errors, saving a larger down payment, and getting preapproved by multiple lenders before visiting a dealership. A co-signer with strong credit can also unlock better terms.

Bad credit doesn't automatically disqualify you from a car loan — many lenders specialize in subprime auto financing. The tradeoff is a higher annual percentage rate (APR) and sometimes a required down payment. Before you shop, pull your free credit report at AnnualCreditReport.com (authorized by federal law under the FCRA via the FTC) to dispute any errors that are dragging your score down.

What credit score do lenders typically require?

There is no universal floor. Some subprime lenders approve scores as low as 500, though rates at that tier can exceed 15% APR. Most conventional lenders prefer scores above 660. The Federal Reserve's G.19 Consumer Credit release tracks auto-loan interest rates by credit tier — checking it gives you a realistic rate benchmark before you apply.

Deep subprime (below 580): approval possible but APR is highest; shop credit unions first
Subprime (580–619): more lenders available; a larger down payment helps
Near-prime (620–659): rates improve meaningfully; compare at least three lenders
Prime (660+): standard rates apply; a bad-credit label often no longer applies

Steps to improve your approval odds

Dispute credit report errors at all three bureaus before applying — errors are common and can take 30 days to resolve
Save a down payment of at least 10–20% to reduce the lender's risk and your loan-to-value ratio
Get preapproved by a bank or credit union before visiting a dealership so you arrive with a competing offer
Consider a creditworthy co-signer; they share legal responsibility for repayment, so choose carefully
Limit hard-inquiry clustering: multiple auto-loan applications within a 14-day window typically count as a single inquiry under FICO scoring

Pitfalls to avoid

Dealership 'buy here, pay here' financing can carry APRs well above market and may not report on-time payments to credit bureaus, so they won't help rebuild your credit. Long loan terms (72–84 months) lower monthly payments but dramatically increase total interest and raise the risk of going upside down on the vehicle.

Auto lending facts — bad credit context

The CFPB notes that consumers with subprime credit scores pay materially higher rates on auto loans compared with prime borrowers, increasing total loan cost substantially over the loan term. — CFPB — Consumer Financial Protection Bureau
The Federal Reserve's G.19 report tracks average interest rates on new and used car loans by lender type, providing a benchmark for comparing offers you receive. — Federal Reserve — G.19 Consumer Credit
Under the Fair Credit Reporting Act, you are entitled to a free credit report from each of the three major bureaus every 12 months, accessible via AnnualCreditReport.com. — FTC — Fair Credit Reporting Act

Key takeaways

Bad credit raises your rate but rarely makes a loan impossible — subprime auto lenders exist specifically for this market
Pull and dispute your credit report before applying; errors can suppress your score unnecessarily
A 10–20% down payment lowers lender risk and can tip a borderline application to approval
Get preapproved at a bank or credit union first so you have a number to negotiate against at the dealership
Avoid ultra-long terms (72–84 months) that reduce payments but increase total interest and negative-equity risk