You may still obtain a car loan with poor credit or lack of credit. Some lenders may be able to work with you, while others will not take the risk. Explore options that can help you obtain financing; you may have to provide a down payment, work with a dealer or wait until your credit improves.
Apply to a Different Bank
If one auto loan provider turned your loan down, try again. You can apply at banks or credit unions in your area or use an online lender. You might find success applying to a bank where you have a checking or savings account. If your account has remained in good standing and your lender can review your financial habits, you may obtain an approval. If regular auto loan providers continue to decline your loan, apply to a subprime lender, which you can find locally or online. Subprime lenders provide car loans to poor credit buyers, although rates are higher and shorter term or down payment requirements may apply.
Work With a Dealership
Large car dealerships work with a variety of lenders. If you haven't chosen your vehicle yet, consider using a large or new-car dealer for your purchase. You do not have to purchase a new car; new car dealers offer a large selection of used cars as well. Call the dealership or meet with a salesperson to discuss your finance options. Be upfront and explain you're having trouble getting a loan. Many dealers work one-on-one with bank representatives. A dealer may also have access to additional lenders.
Offer a Down Payment
Even with poor or no credit, you may still obtain a loan with a large down payment. You are more likely to obtain an approval if you can create equity in the vehicle you purchase. If you can't find a co-signer, consider offering a large down payment, which decreases your requested loan amount. Lenders determine a total loan amount based on a vehicle's market value, so if you can put down half of its value, your lender will assume less risk when extending you a loan.
Wait
If you don't have a down payment to offer, you may want to wait until your credit improves before pursuing a car purchase. If you're declined for a loan, expect to receive a letter stating why you were turned down. Keep the letters you receive; you can obtain a free copy of your credit report using the information provided in the letter. Review your credit to determine how you can improve your rating for future lending opportunities. Examples include establishing longer accounts, paying off past due debt or correcting inaccurate information that harm your credit standing.
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