A low credit score or a short credit history does not rule out a car loan, but it changes what you are likely to be offered. No honest lender, dealer or website can guarantee approval before reviewing an application.
What usually changes
- Cost. Lenders price for risk, so the rate offered is usually higher.
- Conditions. A lender may ask for a down payment, a co-signer or proof of income, or may limit the amount, the term or the vehicle.
- Choice. Fewer lenders may be willing to consider the application.
Before you apply
- Get your credit report and check it for errors.
- Work out a payment that fits your budget with room for insurance, fuel and repairs.
- Save what you can for a down payment.
- Gather proof of income and address.
Protect yourself
- Be wary of “guaranteed approval” and “no credit check” claims.
- Do not pay a fee up front in exchange for a promised loan.
- Ask for the APR and the total cost of borrowing in writing.
- Check whether products such as warranties or insurance have been added to the loan, and whether they are optional.
- Take the agreement away to read if you need to.
If the offer is expensive
A less expensive vehicle, a larger down payment or a shorter term can each reduce the total cost. Paying on time builds your credit history, and you may be able to refinance later on better terms. Check first whether your loan can be paid out early without a charge.