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Can I get a car loan with a 400 credit score?
I made poor decisions when I was younger, and my credit has never recovered. After checking my credit score the other day, it was still 400. I need to buy a car, but I don’t have cash—can I still qualify for a car loan with a credit score of 400?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Many lenders work with bad credit; you may not be able to get a
car loan
with a 400 credit score. A credit score of 400 puts you in the “POOR” category, which means you’re classified as high-risk, and most lenders will deny you a car loan.Although there’s no perfect credit score for a car loan, most lenders want a minimum score of 650 to approve a loan with good terms.
However, a bad credit score might not be the end—you can try a buy-here-pay-here dealership. Buy-here-pay-here dealerships are car dealers that offer in-house financing to risky borrowers. In some cases, they may not even pull your credit.
Instead, they offer risk lenders loans with sky-high interest rates. If you apply for one of these loans, don’t be surprised by interest rates of 20% or more.
The other option for purchasing a car is to have someone with a good credit score cosign. If you can find a friend or family member with good credit willing to cosign, you increase your chances of approval—and may even get a better interest rate.
But before you decide to get a car loan with a 400 credit score at a buy-here-pay-here establishment, ask yourself a few questions:
- Do you need a car that requires a loan?
- Is your money better spent paying down other debt?
- Should you work to improve your credit score before buying a car?
Buying a car is expensive, and you don’t want to pay thousands of dollars in interest. Instead, consider improving your credit score before applying for a car loan. That way, you’ll improve your approval chances and won’t have exponentially high-interest rates.
MORE: What is a good credit score for a car loan?
View full answer
- Gregory R.
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