Can I Get a Car Loan With a Bad Credit Score?

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Let’s just say you’re 26 years old driving around in an eleven year old car. You’re a full time student working a part time job as a waitress, so it’s not like you have twenty thousand dollar lying around, am I right? One afternoon on your way to work, your eleven year old car decides it’s had enough; it’s permanently exhausted. It leaves your stranded on the side of the road, with nothing but your cell phone and five bucks. Great; now you’re late for work, and you no longer have a way to get around. Am I right? Let’s just say that I am. You have no choice but to apply for an auto loan for a new car. Then you remember, you’re 26; and we all know young adults don’t have the best credit. Especially with student loans and monthly bills you’re barely able to afford. So you ask yourself: will I be able to get approved for an auto loan with my bad credit? The answer is: yes. Keep reading, my friends.


Now let me ask you what your credit score is. In your eyes, what is bad credit? 675? 650? 600? 500? Let me break it down for you:

  • Really Good: 740+
  • Good: 680-739
  • Decent: 620-679
  • Bad: 550-619
  • Really Bad: <550

Which category do you fall under? Most young adults don’t have really good credit simply because we’re still new to credit, or we just aren’t too great at handling our money. I’m a young adult myself, and I’m realizing how much I actually still have to learn. I would love to sit here and tell you I’m great with my money; but I would be lying. I know how to be great with my money, but I’m not. Anyways, back to auto loans and credit. With any of these credit scores, you will get approved; I promise. It might be a little difficult if you have really bad credit, but you will still get a loan. The real question you need to sit down and ask yourself is: how much will my interest rates be? I’ll tell you right now, the lower your credit score, the higher the interest rates.


Now, I don’t have bad credit. For my age, I actually have a pretty good credit score. I bought a new car a few years ago, and the sales rep was actually pretty surprised by my credit score. It wasn’t really good, but it was good. I actually went with my mom when I bought the car, and my mom happens to have really good credit. I actually turned out to be the cosigner on my own car, simply because her credit got us a better interest rate. The dealership quoted us an interest rate of around 3.5% for my credit, and 2.5% for hers. My mother is a penny pincher, so she wrinkled her nose at how high the interest rates were. I know, right? You know she has is bad when she thinks 2.5% is high!

A huge piece of advice I would like to share with you: shop around for the lowest interest rates. This is a must. After the sales rep told us the interest rates, my mom turned around and pulled out her cell phone. She called the bank. Now, my mom has been a loyal member at our bank, so she was more likely to get a better discount. After she got off the phone with the bank, she already had a loan taken out. The bank offered us an interest rate of 1.99%! I promise you, as a young adult, it’s nearly impossible to get an interest rate so low on a vehicle. So with just one phone call to our bank, we ended up getting one of the lowest interest rates you can possibly get for a car.

I’ll break it down for you even more. Use to credit chart above to compare credit scores.

The average interest rates for a new car in the year of 2014:

  • Really good credit: 2.70% interest rate
  • Good: 3.67%
  • Decent: 5.49
  • Bad: 9.25
  • Really bad: 12.42%

The average interest rates for a used car back in the year 2014 were:

  • Really good: 3.53%
  • Good: 5.09
  • Decent: 8.18%
  • Bad: 14.15%
  • Really Bad: 18.33%


See what a difference good credit vs bad credit can do? So, back to my purchase a few years back on my car; you think I wanted my mom’s name on the title of my car? No, of course not! But having her name in the title actually saved me a lot of money. That night when we got home, my mom did the math on my car and the interest rates. She came to me and told me with my interest rate on the car, I would only end up paying a total of $1,000 in 5 years of paying off the car. Isn’t that amazing?

Not everybody will get as lucky as I did. Most people don’t have the privilege of bringing their parent with them to purchase a car. Or maybe your parents just don’t have the best credit score themselves, so even with their help, you wouldn’t get very far. Credit score plays a very important role in everybody’s life. This is why it’s so important to take really good care of your credit!

This has nothing to do with auto loans, but this is another really good example of how far you can get with good credit. Like I’ve said before, my mother has really good credit. About ten years ago we moved to Texas, and we had to buy a brand new house. If you don’t already know: it can be extremely difficult to buy a house. My mom bought a foreclosure, and there was a huge bidding war going on with the house she really wanted. At some point in the war, she stopped bidding and decided to look for a different house that might be easier to get. Keep in mind, she wasn’t the top bidder, but within a couple of days, she got a call saying the house was hers. Her price was lower than everybody else’s, sure, but she had the highest credit score, so she was the trusted buyer. Just like that, she had herself a new home.


Back to auto loans and credit score, though. Can you get an auto loan with bad credit? Of course you can! You shouldn’t have much trouble at all, but you will be paying a lot more in interest rates. So, shop around at different dealerships and ask your banks for the cheapest interest rates. It might not seem like a big deal at the time, but interest rates add up fast. Going 5 miles down the road for 2% cheaper interest rate will help you in the long run, I promise you.

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