Having a 500 credit score to make getting a car loan some of the most challenging adventures, but it’s not impossible. While many traditional lenders prefer a higher credit scores, there is financing options available specifically for followers with their credit. If you’re wondering on how to get a car with a bad credit score or a 500 credit score the answer is yes, but there are some conditions.
Understand a 500 credit score
A credit score of 500 falls into the poor category on the credit score scale which ranges from 300 to 850 here’s a quick breakdown .
| Credit Score Range | Rating |
|---|---|
| 800 – 850 | Excellent |
| 740 – 799 | Very Good |
| 670 – 739 | Good |
| 580 – 669 | Fair |
| 300 – 579 | Poor |
Alo credit score typically result in late payments, high debt levels, collections, or limited credit history. Because lenders see you as a high risk, they might not either lead to you or they may charge you a higher interest rate or require additional conditions to approve you for a loan.
Can you get a car loan with a 500 credit score
Yes, but with higher interest rate rates
Lenders will likely approve you for a car loan with a higher than average interest rate because they view the credit borrowers as a rescuer option. While prime borrowers scores above 670 make it rates as low as 5 to 7% back credit buyers below 580. We’ll see about 15 to 29% or even higher .
You may need a larger down payment
A down payment reduces the risk making it more likely to approve you for the loan with a 500 credit score, many lenders may want at least 10 to 20% maybe more of the cars purchase price as a down payment.
For example, if you’re buying a $15,000 car :
- 10% is around $1500
- 20% is around $3000
Loan terms may be shorter
Some lenders might limit loan terms to bad credit buyers. Great credit buyers may qualify for 60 to 72 month loans, lenders may cap the credit Loans at 24 to 48 months to help reduce the long-term risk.
You may need a cosigner
A cosigner with good credit and help you get approved with a better term. They essentially guarantee you alone, meaning they’ll be responsible for payments if you default meaning you don’t pay your auto loan. This makes the lenders more comfortable giving you a loan.
Where can you get a car loan with a 500 credit score?
Not all lenders will work with local credit borrowers, but there are some option.
- Subprime auto lenders these lenders specialize in bank, credit auto loan and offer financing to borrowers before credit scores. Some well-known subprime lenders include auto credit express, capital one auto navigator, and Carvana.
- Buy here pay here car dealerships These dealerships tend to offer in-house financing, meaning that they’ll lend the money directly to you and instead of going into a bank. However, buy here pay here loans often have higher interest rate, instructor repayment terms.
- Credit unions and local banks credit unions are some of the best banks to work with when it comes to lower credit power. If you have an account with a credit union, you might offer a better rates than larger banks.
- auto loan marketplace website like autocreditexpress.com connect you with lenders with specialize in low credit car loans.
How to improve your approval chance
Even with a 500 credit score, there are ways to increase the chances of getting approved.
- Stay for a larger down payment the more that you put down, the less the lender will locate you as a risk. Aim for at least 10% to 20% if more you could do more.
- Improve your credit before applying if possible, take a few months to pay down your debt and make online payments to boost your credit score.
- Always look at a budget friendly car lenders are more likely to approve loans for affordable, reliable vehicles rather than expensive models.
- Get approved before you go to the dealership for preapproval helped. You understand your loan options without impacting your credit score
- Compare multiple lenders interest rates in terms may vary, so shop around for the best deal.
Is a car loan worth it with a 500 credit score?
Yes, you can get a car loan with a 500 credit score, but you’ll need to be prepared for a higher interest rate constructor long term. If you improve your credit before applying, you will likely qualify for a better term.
If you need a car right now, consider lenders that specialize in credit loans and compare your options to avoid overpaying in interest.
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