Can people with bad credit get a car loan?

My grandpa gave me a car when I graduated from high school years ago. But it is too expensive to repair anymore. Where I live doesn’t have great public transit, and I need a car to get to work. I have bad credit, so I’m not sure what to do. Can you get a car loan even if you have bad credit?

Answer
I’m sorry to hear the car your grandpa gave you is on its way out! But don’t worry—people with bad credit can still get a car loan.
To improve your odds of qualifying for a car loan, you can:
  • Get a cosigner.
  • Make a larger down payment to reduce the amount you need to borrow.
  • Work with lenders who specialize in bad credit.
Cosigner: A cosigner who has good credit will essentially vouch for you with lenders, using their better credit as leverage. This can help you get approved for a loan and secure a better deal.
Down payment: The down payment is how much you can pay up front on the car. You’ll pay the rest in monthly installments. Paying a significant portion up front not only looks good to the lender (it’s proof you have savings) but also will reduce the loan amount needed to pay for the rest of the vehicle. However, ensure you’re not causing yourself any financial strain by making too large of a down payment.
Specialized lenders: Dealerships sometimes offer in-house financing to help people with bad credit. Other financial institutions like banks on national and local levels may also have departments that can help. But if you choose to take out a loan specifically designed for people with bad credit, go over the agreement carefully. Sometimes, these loans come with extra high interest rates or APRs to mitigate the risk involved on the lender’s end.
If you get a car loan you are unhappy with, know that you aren’t necessarily stuck with it. Upon improving your credit after several on-time loan payments, you may be able to refinance into a loan with more favorable terms.
You can do this quickly and easily with the Jerry app. Jerry removes the hassle by instantly connecting you with top companies so you can compare offers from multiple lenders to find the best option for you. On average, car owners who refinance save $85 a month on their loans.
Lauren Smith
Answered on Nov 18, 2021
Lauren has written for World Nomads, the Matador Network, Korvia Consulting, and once upon a time Three Fates Games. She graduated from Columbia College of Chicago with a BFA in Creative Writing. After graduating, she moved overseas and lived in South Korea where she spent her free time traveling and going on road trips with friends. She misses the rest stop potatoes and is trying to figure out how to recreate them at home. She's now based outside of Chicago and when she's not writing she spends her free time reading, playing video games, and exploring whenever she can.
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