How do I get a car loan with a 540 credit score?

I want to get a car loan, but I have terrible credit. What can I do to increase my chances of getting approved by a lender?

Your credit score of 540 puts you firmly in the subprime range of credit scores. As a result, getting a car loan will be difficult—but it isn’t impossible.
Most likely, you will have to put up with less-than-ideal interest and loan rates. Per Experian, as of September 2021 the average car loan rate for someone with your credit is 11.03% for a new car or 17.11% for a used car.
If you can afford to wait to buy a car, work on rebuilding your credit report before applying for the loan. If you can push your score above 600 (ideally above 660), you should see a significant drop in your projected interest rates.
If you need a car right now, you may choose to work with online lenders or a buy here pay here dealership. These lenders work specifically with those who have poor credit. Consider taking out such a loan, steadily making payments, and then trying for an auto refinance to get lower rates down the road.
Since you’re going to need full-coverage car insurance when you take out a loan, use the Jerry app to compare quotes in just minutes. With options from up to 50 top insurers, you’re sure to find the best rate without a hassle.
Eric Schad
Answered on Oct 26, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.

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