Getting approved for a car loan will allow you to get the vehicle you want without having to pay the entire balance all at once. Although it’s certainly better to have a good score when borrowing money, you can’t avoid thinking, can I get a used car with bad credit?
You can get a used car even with bad credit, as most auto loans don’t require you to have a specific score to qualify. However, having a bad credit history will significantly limit your options, and most lenders will only offer you higher interest rates.
What kind of credit score do you need to buy a used car? Can I buy a car with a 450 credit score? Find all the answers you are looking for in this article.
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Yes, You Can Get a Used Car With Bad Credit
No matter how impossible it might seem at first, having bad credit history won’t prevent you from getting a used car with a loan. Most auto loans don’t have a minimum credit score requirement, so you only need to find the right lender to get approved.
Although you can qualify even with a 450 credit score, it’s important to note that scoring 500 or lower on the FICO scale is considered bad credit by most banks. Lenders use your credit history to determine whether you’d be able to pay them back, so approving someone with a bad score can only be justified with a very high-interest rate.
Since it’s much harder to determine the value of second-hand vehicles precisely, used auto loans have an even higher annual percentage rate (APR), meaning you will end up paying a lot more by the end of the loan’s life. Your down payment will also be larger, which itself might prevent you from getting a car in the first place.
What’s the Best Credit Score to Have When Buying Second-Hand Cars?
If you want to get a good interest rate for your auto loan, it’s crucial to maintain a good credit score between 661 and 780 on the FICO scale. Borrowers within this range are considered prime loan candidates, which allows them to qualify for much lower interest rates.
Generally, a higher credit score means a lower interest rate, and those with over 800 have the lowest APRs among all borrowers. While this number is very high, recent statistics found that the average American has a FICO score of 716, so it’s easy to see why 500 or lower is considered bad credit.
To better understand the importance of a good credit score, the table below features average used car loan interest rates across different ratings.
| Credit Score | Rating | Annual Percentage Rate (APR) |
| 750 or higher | Great | 6.37% |
| 700-749 | Good | 9.88% |
| 600-699 | Average | 14.94% |
| 451-599 | Bad | 17.91% |
| 450 or lower | Very Bad | Highly unlikely to get approved |
How to Buy a Pre-Owned Vehicle When You Don’t Have a Good Credit Score?
If you’re looking to buy a second-hand car but have a poor credit score, your options may be limited. However, there are still ways to get behind the wheel of a pre-owned four-wheeler, even if you can’t get a loan from a bank.
One way to buy a used car when you have bad credit is to find a private seller. Whether you search online or look for active ads in your local area, be sure to ask the seller lots of questions about the car, such as its age, mileage, and condition. You’ll also want to get the car’s VIN and run a vehicle history report to make sure it doesn’t have any major problems.
Another option is to go through a car dealership that specializes in providing bad credit car loans, such as Auto Credit Express. After all, a dealership can help you find a dealer that may be willing to work with you and finance the purchase despite your poor credit history.
A Good Auto-Title Loan Also Allows You to Buy a Pre-Owned Vehicle
Applying for an auto title loan is another way to get a second-hand car when you have bad credit. By getting an auto title loan, you only use your car as collateral. For example, if you own a car worth $10,000 but owe $7,500 on it, the lender will give you the remaining $2,500 and a title to your car.
In order to get an auto title loan, you must have a clear title to the vehicle you’re using as collateral. However, if the lender doubts your ability to pay back the loan, they could repossess your car if you miss a payment.
Before getting an auto title loan, try to get pre-approved for a traditional loan first. As your credit improves, it will become much easier to get approved for loans with lower interest rates than an auto title loan.
If you decide to apply for an auto title loan, be sure to shop around and compare interest rates. Your best bet will probably be larger lenders like Auto Credit Express or Mid-Atlantic Acceptance. These lenders offer good customer service and have representatives available by phone around the clock to answer any questions you may have about their products.
You can also search for smaller, local lenders like check cashers and credit unions. While these lenders are less likely to give you a big loan, they may still be able to help you find a lender that can meet your needs.
How to Improve Your Credit Score Quickly?
If your credit score isn’t this high enough to get at least a solid interest rate, it might be beneficial to work on improving it before applying for a loan. Fortunately, there are a few things you can do to improve your credit score, like:
- Always pay bills on time,
- Have no late credit payments,
- Keep your credit utilization low,
- Avoid opening too many new accounts at once.
- Make sure the information on your credit report is accurate and up-to-date.
While it might take up to six months to raise your credit score to a good level, the difference in the interest rates will undoubtedly make it worth it.
Check All Your Options and Work on Improving Your History
The process of buying a car is often seen as a very daunting task, especially for those who have bad credit. However, there are plenty of pre-owned vehicles available for purchase, even if your credit score isn’t ideal. By following these tips, you can improve your chances of getting approved for financing and driving off in the car of your dreams.
