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Getting a car loan with bad credit

A low credit score makes financing more expensive, but not impossible. Here is how to approach it and keep the cost down.

What to expect

With weaker credit, lenders charge higher APRs to offset their risk. That means a bigger share of your payment goes to interest, so the same car costs more overall.

Ways to improve your odds and your rate

• Save a larger down payment — it lowers the lender's risk and your principal.
• Get pre-approved — shopping banks and credit unions before the dealer gives you leverage.
• Consider a co-signer — a creditworthy co-signer can lower your rate.
• Buy less car — a smaller loan is easier to approve and cheaper to carry.

Mistakes to avoid

• Stretching to an 84-month loan just to hit a low payment.
• Rolling negative equity from an old loan into a new one.
• Accepting the first dealer financing offer without comparing.

Plan for refinancing later

If you take a high-rate loan now, improving your credit and refinancing later can cut the cost significantly.

General information, not financial advice.