Buying a car with bad credit can feel like a huge obstacle—but it’s far from impossible. With the right strategy, preparation, and a bit of flexibility, you can secure an auto loan even with a low credit score. Below are the 10 most effective ways to get a car with bad credit in the U.S. today.
1. Check and Understand Your Credit Report
Before applying for a loan, it’s critical to understand where you stand. Request your credit report from the three major bureaus—Equifax, Experian, and TransUnion—through AnnualCreditReport.com. Carefully review your report for errors like incorrect late payments, collections you’ve paid off, or accounts that don’t belong to you. Disputing these errors can improve your score quickly. Knowing your credit score also helps you avoid overpaying by targeting lenders who specialize in your score range. Many lenders will ask about your score or pull your report, so being one step ahead helps you answer confidently and plan strategically.
2. Save for a Larger Down Payment
When you have bad credit, a larger down payment can be a game changer. It reduces the lender’s risk and shows you’re financially committed. Putting down 10–20% (or more) can help offset a poor credit history and may lower your interest rate. It also reduces the total amount you’ll need to borrow, making your monthly payments more manageable. If you can’t save that much, even a few thousand dollars could make a difference. Selling an older car, cutting expenses for a few months, or using your tax refund can help you build a solid down payment.
3. Get Pre-Approved with Bad Credit Lenders
Before visiting a dealership, get pre-approved through online lenders or credit unions that cater to bad credit borrowers. Companies like Auto Credit Express, Carvana, and RoadLoans provide quick, soft-pull pre-approvals that won’t impact your credit. Pre-approval gives you a realistic budget and more negotiating power at the dealership. It also helps you avoid high-pressure dealer financing tactics and shows that you’re a serious, informed buyer. When lenders know you’re shopping around, they may offer better terms to earn your business—even if your score isn’t great.
4. Consider a Buy Here, Pay Here Dealership
Buy Here, Pay Here (BHPH) dealerships offer in-house financing and are more lenient when it comes to credit scores. These dealerships finance your car directly rather than through a third-party lender. While interest rates are often higher, they provide one of the most accessible ways for people with very poor credit to get a vehicle. Be sure to read the terms carefully and ensure the car is mechanically sound—BHPH dealers sometimes sell older or high-mileage vehicles. Still, for many with subprime credit, this can be a helpful way to get on the road quickly.
5. Get a Cosigner with Good Credit
Adding a cosigner is one of the most effective ways to secure better loan terms with bad credit. A cosigner—typically a family member or close friend—agrees to take responsibility for the loan if you default. Their good credit can dramatically reduce your interest rate and increase your chances of approval. Just make sure you and your cosigner both understand the financial responsibility involved. A missed payment will hurt both credit scores. Clear communication and a plan for repayment can make this a mutually beneficial solution.
6. Shop for a Less Expensive or Used Vehicle
When your credit score is low, it’s smart to adjust your car expectations—at least temporarily. Shopping for a reliable used vehicle rather than a new luxury model can make the entire buying process more affordable and practical. A lower loan amount means less risk for the lender and smaller monthly payments for you. Focus on reliability and resale value rather than looks or features. Look for brands known for durability, like Toyota, Honda, or Hyundai, and have a mechanic inspect the car before buying to avoid unexpected repair costs.
7. Improve Your Credit Score Before Applying
If you’re not in a hurry, even a 20- to 30-point bump in your credit score can unlock better financing options. Start by paying down credit card balances, making all payments on time, and avoiding new inquiries. Consider using a credit-building loan or secured credit card to show lenders you’re reliable. It might only take a few months of consistent behavior to raise your score enough to qualify for more affordable rates. If time allows, improving your credit is one of the most financially sound ways to prepare for an auto purchase.
8. Compare Multiple Loan Offers
Never settle for the first loan offer—especially with bad credit. Take advantage of online platforms like LendingTree or MyAutoLoan to receive multiple quotes from different lenders. Even a small difference in APR can save you thousands over the life of a loan. Comparing options also allows you to spot hidden fees, better loan terms, or flexible payment schedules. Some lenders offer perks like no prepayment penalties or refinancing after a year of on-time payments. Make sure you read the fine print and calculate total loan costs—not just monthly payments.
9. Join a Credit Union
Credit unions often provide more favorable terms than traditional banks, especially for members with poor credit. These nonprofit institutions are known for their customer-first policies and may look beyond just your credit score. Many credit unions offer “second chance” loans or auto loan refinancing at lower rates. Some also consider your banking history and income more heavily than your credit score. You may need to meet membership requirements (like living in a certain area or working for a specific employer), but joining is usually straightforward and worthwhile.
10. Consider Lease-to-Own Options
If you’re struggling to get approved for a traditional car loan, a lease-to-own agreement may be an alternative. These deals are structured similarly to leases, but you have the option to buy the car at the end of the term—or sometimes automatically own it after completing all payments. Lease-to-own programs typically cater to people with credit challenges and may not require a high score. However, they may come with higher overall costs. Make sure the terms are clear, the car is in good condition, and that you’re prepared for regular maintenance and full responsibility.
FAQs
Q1: What credit score is considered bad for car loans?
A credit score under 580 is generally considered bad or “subprime.” While many lenders prefer scores above 600, several specialize in financing borrowers with scores from 400–579.
Q2: Can I still get a car loan if I’ve had a bankruptcy?
Yes, many lenders work with applicants who have gone through bankruptcy—especially if it’s been discharged. Some lenders even finance applicants in active Chapter 13 bankruptcy with court approval.
Q3: Is it better to get financing through a dealership or a bank with bad credit?
It depends. Dealerships may offer more flexible options for bad credit, especially BHPH dealers. However, banks and credit unions may offer better rates if you qualify, particularly with a cosigner or strong income.
Q4: How much should I expect to pay in interest with bad credit?
Interest rates for bad credit auto loans in 2025 can range from 10% to over 20%, depending on your score, income, and loan term. Comparison shopping is key to finding the most affordable option.
Conclusion
Getting a car with bad credit in the USA might seem daunting, but it’s far from impossible. With a proactive approach—checking your credit, saving a down payment, exploring lenders, and even adjusting expectations—you can find a solution that gets you on the road without wrecking your finances. The key is preparation, research, and knowing all your options. Whether you’re working with a cosigner, going through a credit union, or choosing a reliable used car, there’s a way forward no matter your credit score.