7 Car Financing Options If You Have Bad Credit

how to get a car loan if you have bad credit

For any individual or family, buying a car is a very important investment. With a car, moving around and running errands becomes easier and convenient. However, for most people, having bad credit feels like a hindrance to this dream.

But believe it or not, there are other financial options that you can use to get yourself a car even when you have bad credit to your name. These car finance options include;

1. Bad credit financing service

They are finance companies that work on your behalf to obtain financing for your car when you have bad credit. Even if you have a history of repossessions, bankruptcies, delayed pay, or no pay at all, they can still find you suitable financing for your car.

What you should have in mind when you use this financing option is that the interest rates might be a lot higher than the traditional financing options. You should also ensure you keep up with your payments every month because these finance companies won’t hesitate to get the car back if there is a delay in payment.

2. Use of a Co-signer

Even if you have bad credit, you must know a relative or friend with an excellent credit score. When seeking financing for your car, you can ask them to cosign for you. In this financing option, your friend or relative is as liable to the payments of the car just as you are.

If you delay the payments or decide to default, they are stuck with the bills. Default in this kind of financial option, however, is not a good idea as you can be jailed or fined.

3. Dealership finance department

Most dealerships are known to provide financing options for clients, and they can do so even if you have bad credit. What they do is let you buy the car on credit, and then every month, you make payments directly to them.

You make direct payments to the dealership because this option is equivalent to borrowing money from them. However, it’s important to note that they treat delays in car payments very seriously. You could end up losing the car even after the slightest delay in making a monthly payment.

4. Workplace finance department

This is one of the most flexible ways to finance your car if you have bad credit. This is because you’re working with the same people who will help you find a suitable car and finance it. Since it’s your workplace, there is that urge to get you a car that translates to their business value.

For this reason, you might end up getting a car you didn’t think you’d ever afford. In this option, you might need to make a bigger down payment for the car to prove your creditworthiness.

5. Second-chance car loan

As the name might suggest, these companies give second chances to people looking for car financing but have bad credit. If you had your conventional loan application rejected before, these companies help you get a car loan that you’d get approved for if you had good credit.

However, this financing option might come with even higher interest rates for anyone looking for financing.

6. A credit union

It doesn’t matter whether you’re a member of a credit union or not; they can get you the car financing you need. They are known to specialize in working with people with bad credit.

This financing option, however, can restrict you depending on who your employer is and where you live. It’s good to contact a credit union first and see if you qualify for their loans before deciding on the car you want.

7. Auto lenders

These are organizations that specialize in lending cars to people even when they have bad credit. You get to pay back for the car in installments with even higher interest rates.

The advantage of this option is that they give a fast preapproval, giving you the chance to shop around for the car of your choice.


It’s important to be aware of scammers and fraudulent terms in the contracts when you’re looking to finance a car with bad credit. This might lead to you paying more than double what you should be paying for a particular car.

By: Raymond James

About the Author:

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Ray is a sought-after thought leader and an expert in financial and money management. He has been published and featured in over 50 leading sites and aims to contribute articles to help novice financial planners. One of his goals is to impart his knowledge in finance to educate and help ordinary people create and achieve their financial goals.

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