Bad Credit Car Loan FAQs

The following are some of the frequently asked questions with regard to bad credit car loans:

How much of a loan can I get pre-approved for?

Unfortunately, this number is as variable as the number of people in the US. Each person’s situation is unique and the bad credit car loan amount that you will get pre-approved for is based off a number of factors including your FICO score, your overall credit report, what type of issues are on your report, how recent they are, and much, much more…

How large of a down-payment will I need (if I qualify for a loan)?

Again, the down payment amount is variable based on your situation and credit history. Generally speaking, the worse your credit, the greater the down payment will be required. In any case, you should expect at least 10 percent down whenever you are purchasing a vehicle.

Will inquiries into my credit history further impact my credit rating?

The answer is: “Yes, they can.” Whenever you’re shopping around for an auto loan (or more credit in general), you should know that having creditors look up your credit report records will cause an inquiry to show on your credit report. And, inquiries can add up… which is often looked at in a negative fashion by lenders. For this reason, too many inquiries on your credit report can actually make getting a vehicle loan tougher.

Can I use my trade-in as money down for my vehicle loan?

You absolutely can! Please note, however, that additional down payment money may be required depending on your credit situation, how much “equity” is in the car you are trading in, what condition your trade is in, and if there is a lien on the trade-in vehicle.

Will a cosigner help with getting a vehicle loan?

Having a cosigner can provide a lot of help to you when applying for an auto loan. This is especially true in a bad credit or no credit situation. But even if you have a cosigner, you’ll still be required to meet the income requirements for the loan you are applying for.

Less than a year ago, I had a vehicle repossession, can I still pre-qualify for a bad credit car loan?

The answer is maybe. If the repossession was NOT included in a bankruptcy, and there is still a balance on the account, you can probably still pre-qualify for a bad credit, auto loan. Note that greater down payment requirements will most likely apply and your vehicle selection will probably be limited to newer cars that are still under factory warranty.

Is it possible to get pre-approved with a bankruptcy in my past?

Probably. As long as the bankruptcy has been fully discharged, or the bankruptcy trustee has given you an “Authorization to Incur Debt,” you can probably get pre-approval from an appropriate lender.

I’m currently in a Chapter 13 Bankruptcy… Will I still qualify?

In many cases, the answer is yes. Note however, it may take longer to process your bad credit, car loan because of the bankruptcy. In addition, you will have to obtain an “Authorization to Incur Debt” from the trustee of your bankruptcy which will typically take a week or two to get. Always consult your bankruptcy attorney on matters such as these.

If I have no credit at all… can I still get approved for a car loan?

Most likely you can! You will probably need either a large down-payment or a cosigner on your loan, but there are a significant number of lenders and dealers out there who will help you if you have no credit.

How can I figure out my monthly payments?

Like any other loan, the monthly payment on a bad credit car loan is based on your credit profile (and, of course, the vehicle you end up buying). Note that newer, lower mileage cars are better because they usually qualify for extended terms. These are what most bad credit buyers will need. In general, the best payment options come from a newer model, less expensive vehicle that has less than 40,000 to 50,000 miles. To understand your monthly payment, you should consult a payment calculator available on many websites on the Internet. has a calculator that can help you figure out your payment.

What kind of interest rate can I expect on my bad credit car loan?

While this is a good question, there really isn’t a simple and direct answer. Car loan interest rates are based off a wide variety of factors. These include your general credit profile and how much equity is associated with the loan. Generally, the higher your credit rating and the larger the down payment is, the lower the rates you will receive on your vehicle loan. Additionally, the make, model, and year of the vehicle you want to purchase also play important roles in the interest rate you will receive on your loan. As an aside, interest rates typically increase by approximately one point per year of age on the vehicle. So the older it is, the higher the rate you’ll pay.

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