• Jennifer Snyder

Buying a Car in 2019 with Bad Credit

Updated: Jul 29, 2019

Less than perfect credit can put a damper on a lot of things, including loans. However, it is possible to get a loan in 2019 with bad credit.


Auto loan seekers with credit scores under 650 should be prepared and enter the process knowing they'll probably have to pay a higher interest rate than the lower interest rate that someone with decent or good credit would be paying. You shouldn't let this discourage you though.



Let's break down the art of getting financing for a car and receiving an easy car loan approval with that less than perfect credit.


1. Check Your Credit

You may think you have bad credit because you've overextended yourself or are making late monthly payments, but it's important to know for sure so that you are not making decisions based on assumptions.


Credit scores are a big influencer in loan approvals when deciding what interest rate you will receive. Check your credit from the three major credit bureaus months before you begin car shopping.


Knowing your score before you go can help you catch and correct any errors that the report may contain. Doing this in advance will give you the time needed to contact the bureaus and getting any errors corrected as well as improve any areas that can help improve your score. I personally like to use CreditKarma as it is completely free and updates weekly.


2. Improve Your Score

As was mentioned above, one of the biggest reasons to check your credit report is to see what you need to improve. You should allow for 30 days to dispute credit report mistakes before you start shopping for cars and financing.


If your score isn't as bad as you thought, paying off credit card debt, correcting errors, or taking care of old collection accounts could bump your score up.


3. Consider Getting a Pre-Approval

The pre-approval process analyzes your income, expenses, credit score, and credit report to help determine if you qualify for an auto loan and how much they would be willing to lend you. Doing this in advance will help deal with any obstacles you might face and spare you a lot of headache later.


Questions to Ask Before Getting a Car Loan

Ask pertinent questions such as how much interest will you be paying over the life of the loan. Make sure there is no prepayment penalty - meaning you won't be penalized for paying off the loan sooner than agreed.


Find out the necessary steps for refinancing the loan if you have a high interest rate. One way to ask this is, "How long do I have to deal with this until I can change and get something more reasonable?"


Auto refinancing can help lower your interest rate as well as your monthly payments which can save you hundreds or thousands in the long run.


Typically, for auto loan refinancing, you should have on-time payment history for at least twelve months. Keep in mind that the loan refinancing process will also take your credit history and current credit scores into account so make sure you keep paying everything else on time as well.


Be smart about your credit. Every time a lender pulls your credit report, it creates an inquiry on your file and they can hurt your credit score. Most scoring models will count auto loan inquiries with a certain window - usually 14-45 days - as a single inquiry. To be on the safe side, limit your auto loan shopping to a two-week period to avoid damaging your credit scores further.


Be prepared when entering the process. Whether you have good credit or bad credit, remember to budget.


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