Auto Loan Options for Car Buyers with Bad Credit

What options do you have if you are not in the top credit rating tier or you have been turned down for an auto loan?

Harriet Johnson Brackey, personal finance columnist for the South Florida Sun-Sentinel and Miami Herald, says that you should try your local credit union or apply to some online lenders.

“Everyone’s been affected by the credit crisis but credit unions are in better financial shape because they aren’t dealing with the mortgage fallout,” she says.

Gerri Detweiler, credit advisor for, also encourages shoppers to try their bank or credit union for an auto loan.

“I’m a big fan of shopping around,” she says. “Try your bank or credit union first, then you can compare it with the dealer’s offer.”

“I imagine there are car loans available at all credit levels. The buy now, pay later places are more common now. There are a number of options to credit-challenged consumers.”

“There’s always the co-signer loan route option, but I’m not a fan of it because it leaves the co-signer responsible for the loan and they don’t have the rights to the car.”

Brackey explains that if you go into a dealer and they tell you they will give you an auto loan, but the rate is high, you should be concerned.

“If they offer you an interest rate of 10% or higher, you’ll know that something is wrong with your credit,” she says.

Detweiler says that if you can only get approved at a high interest rate, then maybe you should consider a different vehicle, maybe one that is cheaper.

What should customers do before they come to a dealership?

“Now more than ever, customers need to be wary of their credit scores,” says George O’Sullivan, e-commerce director at Thoroughbred Ford in Kansas City, Mo. “People with 700+ credit scores can still get whatever they want. But if it’s below 700, they need to clean up their credit, be prepared to put more money down and don’t be upside-down on their current loan. These things are huge with finance companies.”

If you have bad credit and need a car loan to purchase your next vehicle, don’t assume you’ll be denied. There are finance companies and lenders that lend money to consumers with not-so-great credit scores.