How to get a car loan when you have bad credit


Are you looking for a car, but worried that your bad credit will keep you from getting a loan? The good news is that you can get a car loan when you have bad credit – just work with the right lender and plan accordingly with these steps.

Knowing your credit is the first step

Before you go to a dealership or research vehicles, you need to know your credit score and what’s on your credit reports.

The majority of lenders look at your FICO score, so that’s what you should be looking for as well. Check to see if your bank, credit union, or credit card company offers free access to your FICO score. Otherwise, you can pay a small fee to the credit bureaus or directly to FICO to get it.

You should also take a look at your credit reports. You are entitled to a free copy of your reports every 12 months from each of the three major credit bureaus: Equifax, TransUnion and Experian. These can be requested at

It is important that everything indicated is correct. If you notice any errors, you can dispute them with the reporting credit bureau. They are required to investigate and if they deem your request to be justified, the inaccurate information will be deleted.

From there, you can move on to the next step: budgeting and research.

Research and budget for a car loan

Once you know where you stand credit-wise, you can research different vehicles and plan a budget.

First, you need to calculate your debt-to-income (DTI) and payment-to-income (PTI) ratios. For a quick estimate, you can use our car loan estimator and Payment Calculatorbut let’s explain what these ratios are and how you can calculate them yourself.

Your DTI ratio looks at your monthly expenses and compares them to your pre-tax monthly income. To find your DTI ratio, add up all your monthly bills — including estimated vehicle and insurance payments — and divide the total by your monthly pre-tax income. Bad credit lenders generally refuse applicants if their DTI ratio is above 45% to 50% of their monthly income.

Your PTI ratio looks at the percentage of your monthly income needed to pay for your car. It is found by taking an estimated car plus insurance payment and dividing the sum by your pre-tax monthly income. Subprime lenders generally won’t accept a PTI ratio higher than 15% to 20%, so this calculation gives you a good idea of ​​the state of your car-buying budget.

To find the typical maximum monthly payment range, multiply your pre-tax monthly income by 0.15 (15%), then by 0.20 (20%). You should opt for a vehicle whose monthly payment does not exceed 20% of your monthly income, but you should try to keep it as low as possible.

After calculating your DTI and PTI ratios, you can research vehicles and find a few that fit your budget. It’s important that you choose something that meets your day-to-day needs – now is not the time to aim for your dream car if your credit isn’t great.

When choosing a vehicle, be sure to consider insurance, fuel, repair costs, taxes, and additional fees associated with buying a car. All of these things need to be factored into your budget.

Gather all your documents

Once your figures are calculated, you can gather all the documents you need to start the funding process. You will need to bring additional documentation, as you will more than likely be dealing with a subprime lender or a buy here pay here dealership – both work with consumers who have bad credit.

Requirements vary, but you generally need to bring proof of income, proof of residency, proof of a working phone, and a valid driver’s license or ID. In addition to this, you will have to pay a deposit; you can use equity, cash, or a combination of both to meet the down payment requirement.

The final step: find a dealer

The final step to take is to find a dealer willing to work with you. Luckily, you don’t have to go far to find one – we can do the research for you!

AT Auto Express Credit, we work with a nationwide network of specialist finance brokers who have the subprime lenders you need. Don’t go around looking for a dealer who can help you – save time and money by having a destination in mind!

Simply complete our easy and hassle-free form car loan application form, and we’ll begin the process of connecting with a local reseller. There is never any cost or obligation to purchase, so what are you waiting for? Start now!


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