Can You Finance A New Car With Bad Credit?

Just saying subprime loan or bad credit auto loan could get you shot in some circles, but is it really impossible to buy a new car if your credit is less than stellar? Yes, it is a real possibility. The number of lenders who specialize in financing credit scores under 620 has grown to include dozens of national and regional lending groups.

The lending requirements for a bad credit auto loan can be much stricter than typical new car loans, but there are still quite a few new car models that qualify. You will not be able to finance that new Cadillac or Hummer you have your eye one, but is either really practical? Since you will lose a large amount of value once the car is driven off the lot, the larger your down payment is, the better your chance of getting approved. A typical down payment is 20% to cover the initial depreciation and a shorter loan term will prevent you from going upside-down on your loan.  You might want to avoid anything longer than 60 month auto loans for that reason.

It can be a hit or miss proposal to drive from dealer to dealer looking for one that works with a lender who specializes in second chance auto financing. Your best bet is to look online for a company that will broker a deal with several banks so that you can choose the best option for you.