5 Ways to Buy a Car with Bad Credit

March 14th, 2017 by

One of the most common questions we get is “can I buy a car with bad credit”? In many cases, the answer is yes.  On average anyone with a credit score below 600 is considered a high risk borrower. There are two types of lenders primary and secondary. Primary lenders lend to borrowers with good to excellent credit ratings and offer single digit interest rates. Secondary or sub-prime lenders finance cars for those with poor credit scores generally with double digit interest rates.


These are 5 tips on what to expect if you want to buy a car and you have credit problems.

  1. Be able to prove that you are employed and have a minimum gross income of at least $1800 a month. Having worked at the same employer for one year or more will show stability and be advantageous.
  2. Be prepared to make a down payment of 20% or more. This could be cash, trade equity or a combination of the two.
  3. Select the right vehicle. Older and cheaper is not necessarily better as the value of the car and the lender’s ability to recoup their investment if you default is a necessity. A good salesperson and finance manager can help you determine the best loan to value ratio.
  4. Do NOT submit loan application at multiple dealerships trying to secure the best deal. Every time an inquiry is made on your credit report, your score goes down.
  5. Have someone co-sign your loan. Making car payments on time is an excellent way to establish a positive credit score. If you have a family member or friend with good credit that is willing to co-sign for you it will improve your chances of securing a loan, expand your vehicle selection options and possible enable you to secure a loan from a primary lender.

Each financial situation is different.  Our Finance Managers have the expertise to answer your questions and advise you on your best options for purchasing a car and securing a loan.