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August 15, 20232 min read

How to Buy a Car with Bad Credit

Do you need to buy a new car but have bad credit? The good news is – buying a car with bad credit can be challenging, but it is not impossible.

Below we offer a few tips on how to buy your next car with bad credit, no credit, or a low credit score.

Important Steps to Take Before Shopping for a Used Car Loan

Before you go shopping for your new car, it is important to understand how much buying power you have based on your credit score. Check your credit score online before you go to the dealership to apply for a car loan.

Most financial institutions rely on credit score data provided by Experian, Equifax, or TransUnion. Get a copy of your credit report from each credit bureau and compare notes on what they are reporting your credit scores as.

You can also use a credit report to dispute inaccuracies, which can boost your credit score.

Get a Co-signer or Consider Making a Larger Down Payment if You Have a Shaky Credit History

Suppose your credit rating reflects a history of making late payments combined with a bad credit score. In that case, you may have to pay an extremely high-interest rate on a new vehicle.

Ontario residents who start with a high-interest rate can consider refinancing their car purchases. They can also qualify for a lower interest rate by adding a co-signer to their new or used car financing application.

A Co-signer Can Help People with Poor Credit Avoid Sky High Loan Payments or Subprime Loans

If you find out that your credit score is too low to qualify for a used car auto loan with reasonable interest rates, you may need to get a co-signer (or consider making a larger down payment.)

A co-signer is usually an interested party with good credit, like a friend, family member, or spouse, who can help bolster your loan application by assuming partial responsibility for an auto loan if you can't pay your monthly payments.

Canadian co-signers must provide the financial institution with proof that they meet the minimum monthly income criteria listed on the original borrower's application.

Making a Larger Down Payment on a Used Vehicle Can Reduce Your Loan Amount and Change Loan Terms for People with a Bad Credit Score

If you already know that your credit rating and previous payment will prevent you from qualifying for most auto financing options with lenders offering low-interest rates, consider financing with a credit union or your credit card company.

People with a history of bad credit who are forced to get bad credit car loans often pay higher interest rates than those with good credit. While some car dealerships specialize in buy here, pay here, or no credit check car loans, regardless of the financing option you choose. A larger down payment can help reduce the costs. To learn more, talk to us at FFUN Cars.


Kaylee Pardoski

Written by Kaylee Pardoski

Kaylee is an experienced Sales Manager with FFUN Cars who has worked in various sectors within the automotive industry. Based on her own experiences, Kaylee works to improve every customer's car buying experience.