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An auto loan’s bad credit score is not determined by a single figure. Generally speaking, though, you should anticipate higher interest rates and more challenges obtaining a loan if your credit score is below the mid-600s.
People with poor credit scores do receive auto loans on a daily basis because lenders take a variety of factors into account when granting loans. They might have to give lenders more details, put down larger sums of money, pick a less expensive vehicle, or agree to higher interest rates.
Best Subprime Auto Loans
These companies are loan-finding services. Your loan request is prequalified by them, and they then forward it to numerous dealership networks, neighborhood banks, credit union offices, and other direct lenders. Competition among lenders makes it more likely that you’ll receive the best deal.
- $1 billion worth of bad credit auto loans have been closed by a network of dealer partners.
- Specializes in bad credit, no credit, bankruptcy and repossession
- In business since 1999
- Easy, 30-second pre-qualification form
- Bad credit applicants must have $1500/month income to qualify
- See application, terms, and details.
★★★★★
| Interest Rate | In Business Since | Application Length | Reputation Score |
|---|---|---|---|
| 3.99% – 29.99% | 1999 | 3 minutes | 9.5/10 |
Auto Credit Express bridges the gap left by banks and credit unions by arranging loans for borrowers with credit scores between 500 and 550. Since 1999, the company has actually given out more than $1 billion in loans to people with bad credit.
Prequalifying for an Auto Credit Express loan just takes a few minutes. You must be a US citizen and have a pretax monthly income of at least $1,500 in order to qualify. The loan term and rate will be decided by the car dealers who respond to your loan request; you can select the one that best suits your needs.
- Auto loans for purchase, refinance, and lease buyouts
- Nationwide lender network
- Find up to five lenders who meet your criteria for borrowing.
- It’s free and requires no commitment, and it only takes a few minutes.
- See application, terms, and details.
★★★★
| Interest Rate | In Business Since | Application Length | Reputation Score |
|---|---|---|---|
| Varies | 1998 | 4 minutes | 9.5/10 |
Customers with all credit levels, from excellent to bad, can apply for auto loans from the direct lenders on the LendingTree network. One or more loan offers from the lenders on its extensive national network should be able to be handled by you, including exclusive offers for both new and used cars.
You can get quotes and offers from auto lenders by completing a brief online loan request form. Every loan offer will have a different monthly payment, down payment, and interest rate. You are not required to accept a loan offer from LendingTree, and the company does not charge for its loan-finding service.
- With RefiJet, customers can reduce their auto payment by $150 on average each month*.
- A refinance auto loan’s pre-qualification has no effect on your credit score.
- Nationwide network of lenders
- We give you choices from lenders based on your circumstances.
- See application, terms, and details.
★★★★★
| Interest Rate | In Business Since | Application Length | Reputation Score |
|---|---|---|---|
| Varies | 2016 | 5 minutes | 9.0/10 |
RefiJet, a Colorado company, uses a network of auto lenders to refinance auto loans so that it can buy out your lease, reduce your monthly payment (if you qualify for a lower interest rate), or convert a portion of your car equity into cash.
Your first step is to prequalify online. A verifiable source of income, a clean record of recent loan payments, a car that is no older than ten years old, complete insurance coverage, a current registration, and a driver’s license that is still valid are requirements for eligibility. By refinancing an auto loan, the typical RefiJet customer can save $150 per month, or $1,800 annually.
- Free, no-obligation application
- focuses on subprime, first-time buyer, bankruptcy, and bad credit auto loans.
- Affordable payments and no application fees
- Connects thousands of car buyers with auto financing daily
- See application, terms, and details.
★★★★★
| Interest Rate | In Business Since | Application Length | Reputation Score |
|---|---|---|---|
| Varies | 1994 | 3 minutes | 9.0/10 |
Car. Loan. Com Auto Loan can locate one or more auto lenders that accept bad credit borrowers with ease. Just a few minutes are needed to finish the online loan request form. Once you prequalify, anticipate receiving one or more loan offers from the lenders in its network.
This business has been assisting vehicle purchasers for over 20 years. Many Buy Here, Pay Here (BHPH) car lots that provide in-house auto financing are part of its network. BHPH lots determine their own financing conditions and take into account non-credit criteria like steady income
- Loans for new, used, and refinancing
- Queries a national network of lenders
- Bad credit OK
- Get up to 4 offers in minutes
- Receive online loan certificate or check within 24 hours
- See application, terms, and details.
★★★★
| Interest Rate | In Business Since | Application Length | Reputation Score |
|---|---|---|---|
| Varies | 2003 | 2 minutes | 7.5/10 |
myAutoloan. com is able to locate auto financing choices for both new and used cars. Filling out the website’s brief loan request form is the first step in the procedure. Lenders who are willing to look past your credit score may then make you offers.
Lenders will review your job history and might ask to see copies of your most recent pay stubs. Before you can apply to myAutoloan, the court must have dismissed any prior Chapter 7 or Chapter 13 bankruptcies. com.
What Does A 500 to 550 Credit Score Mean?
A score in this range indicates very poor credit. FICO, the predominant credit scoring system, assigns scores that range from 300 (worst credit) to 850 (excellent credit), with 99% of consumers having scores higher than 500. Roughly 20% of consumers in 2016 scored below the 50% threshold, which is the difference between extremely poor and fair credit.
On the FICO scale of 300 to 850, a credit score of less than 580 is considered “very poor.”
According to a major credit bureau, Experian, approximately 662 percent of consumers with extremely bad credit will miss their loan payments by more than 90 days. 2019% of consumers with a FICO score of at least 500 have been past due for at least three weeks within the last ten years.
Additionally, according to Experian, customers with a 500 score owe $2,734 on average for credit card debt and have a 113 credit utilization rate (CUR). 1%.
The ratio of credit card credit used to total credit available is called CUR. Customers are encouraged by FICO and Value Score to maintain CURs below 2030%; however, cardholders with CURs of 1% or less have the highest FICO scores.
Customers who have credit scores between 500 and 550 clearly have a lot of room for improvement. Credit scores can be raised by keeping debt levels low and paying bills on time, but this is a gradual process that may take six months to a year to show results.
You may want to consider speaking with a nonprofit credit counselor to develop a workable budget and debt management plan.
Can I Get a Car Loan With Bad Credit?
Many lenders offer car loans to consumers with bad credit. The reason is that an auto loan is a secured loan — the lender puts a lien on the vehicle, which serves as collateral should the borrower default. It’s similar to the way a secured credit card works. You must make a cash deposit to collateralize a secured credit card before the issuer ships it to you.
Compared to unsecured personal loans, which lack collateral to protect lenders from losses in the event that the borrower defaults, auto loans are less risky for lenders and, as a result, easier for borrowers to obtain. Personal lenders are forced to choose between suing the borrower in court or selling the debt they have defaulted on to a collections agency at a steep discount.
The downside for auto loan borrowers is that, if they miss payments, the lender can repossess the car. It will sell the vehicle to recoup the money lost from the unpaid loan.
How Do I Apply For a Subprime Auto Loan?
You can apply online for a subprime auto loan with any of the evaluated lenders using a desktop computer or a mobile device. Because of the advancements in automated underwriting systems, you could receive one or more loan offers in a matter of minutes.
You can submit a single loan request to the evaluated lenders, and they will distribute it to direct lenders on their networks. But first, the lending services must prequalify your loan request. The majority of online auto lending networks require the following, though specific requirements may vary:
- Driver’s license: A scanned copy of your valid driver’s license is required.
- Proof of residency: A dated copy of a utility bill or a lease or mortgage statement that includes your name and address in plain sight can be used to demonstrate your residency.
- Proof of employment and income: You must provide one or more copies of your most recent benefits statements or pay stubs as proof of income to lenders. A copy of your most recent federal tax return may also be requested by the lender.
- Minimum credit score: While each lender has its own standards, some focus more on other factors, like income, and others specialize in subprime auto loans.
- Down payment: By providing a down payment as little as $500, you can significantly increase your chances of obtaining a loan. By doing this, you’ll be able to finance less and demonstrate to the lender that you have a stake in the project. Nonetheless, some lenders don’t require a downpayment.
While each lender will obviously have different requirements, these are the general standards for auto loans.
How Big of a Loan Can I Get With a 500 Credit Score?
It’s challenging to determine with precision how much you can borrow with a particular credit score because each auto lender has its own lending policies. However, we are aware of a number of variables that lenders consider when you apply for a car loan:
- Regardless of your credit score, the loan-to-value (LTV) ratio is always a crucial consideration when applying for an auto loan. The loan amount is compared to the vehicle’s current value to determine your LTV ratio. As an illustration, you might buy a car for $30,000, but because of your trade-in and down payment, you only need a $20,000 loan. The LTV would be $20,000 / $30,000, or 66. 67%, which should be low enough for most auto lenders. Keep in mind that a car depreciates the moment you drive it off the lot, which is why lenders include a buffer in their LTV requirements.
- Debt-to-income (DTI) ratio: Although auto loans are secured, lenders still require proof that you will be able to pay back the loan balance each month for the duration of the loan. Your monthly debt payments are compared to your monthly income to determine your DTI ratio. While most lenders prefer a DTI of less than 3%, you could be eligible for a higher percentage if the bad credit auto loan has a relatively low LTV ratio.
- Recent payment history: Lenders are aware that financial errors in your credit history are the cause of a 500 credit score. However, they are more likely to accept applicants who have a spotless payment history from the previous 12 months.
Keep in mind that a larger loan translates into larger payments, higher interest rates, and more interest charges. Don’t take on more debt than you can manage to pay back each month if you want to prevent having trouble paying it back. Late payments can make bad credit even worse.
How Do I Increase My Approval Odds?
In spite of bad credit, the following advice should make it simpler to obtain a car loan:
- Increase your down payment: The likelihood that the car lender will approve the loan increases with the amount you prepay. To encourage you to make on-time payments, lenders want you to risk part of your money up front. Larger down payments may also qualify you for bigger loans.
- If you currently own a car, trade it in: The effect of a trade-in is comparable to that of a down payment. Depending on what dealers think they can make by reselling your car, trade-ins might be even more valuable.
- Include a cosigner: Adding a cosigner with good credit entails adding a source of additional income to the application. Due to this, the lender might think about granting a bigger loan or offering a better interest rate.
- Accept biweekly payments: Subprime borrowers may be required by auto lenders to make in-person loan payments at the dealership every two weeks. Because it shows that you are willing to fulfill your responsibilities, this can increase your chances of being approved.
The best method to get loans and credit cards quickly is to have a high credit score. To rapidly raise your credit score and add a positive payment history to your credit report, think about utilizing services like RentReporters and Experian Boost.
Which Credit Scores Do Car Lenders Use?
When examining a borrower’s credit, the majority of auto lenders utilize a version of the FICO Auto Score. The fact that the three main credit bureaus—TransUnion, Equifax, and Experian—publish credit scores that typically vary further complicates matters.
The following chart summarizes the widely used FICO scores:
Every now and then, FICO announces a new scoring model along with promises of improvement. In order for dealers to use the new model, they have to pay a licensing fee. However, rather than purchasing a new scoring model, the majority of dealers pay for an existing scoring model and stick with it. That’s why dealers use different scoring models.
FICO Auto Scores range from 250 to 900, not the traditional 300 to 850. The average American has a FICO Auto Score of 701, according to Experian. Your scores will probably differ across the various scoring models.
Do I Need to Show Income to Get a Car Loan?
Yes, car dealers require income verification to prove you can afford to repay the loan. Most auto lenders will not directly contact your employer to verify your income. Instead, they typically request several recent paycheck stubs that show your year-to-date earnings.
You should demonstrate some income since it will increase your chances of being approved and could result in a lower APR. In addition to pay checks, the majority of lenders will take into account income from investments, Social Security, disability, structured settlement, alimony, student aid, and other regular payments.
How Will a Vehicle Loan Impact My Credit?
Getting a car loan may not have a big impact on your credit score. However, making monthly loan payments on schedule can help you establish credit over time, while failing to make a payment for thirty or more days can seriously damage your credit.
Using a soft credit pull, lenders frequently let you prequalify for a loan before you start the application process. Soft pulls do not impact your credit history or score. However, when you apply for an auto loan, the majority of independent lenders and auto dealers demand a hard credit check, which could barely affect your credit score.
The effect of an auto loan on your DTI ratio is a more important factor to take into account. While the ratio might not have a formal impact on your credit score, lenders frequently utilize it in the loan underwriting process. Taking out a car loan can increase your debt-to-income ratio and negatively impact your future loan eligibility.
It is possible to reduce your debt-to-income ratio by making quick loan repayments. More money from new sources of income or a raise at work will also be beneficial.
Compare Auto Loans For a 500 to 550 Credit Score
Our review of the best auto loans for a 500 to 550 credit score shows that you have several options when you need a subprime car loan. Each of the reviewed networks can provide you with multiple offers. It’s crucial to closely examine each proposal for hidden costs and other unpleasant surprises.
The good news is that network lenders can easily locate subprime auto loans for you at no cost or obligation.
500, 501, 502, 503, 504, 505, 506, 507, 508, 509, 510, 511, 512, 513, 514, 515, 516, 517, 518, 519, 520, 521, 522, 523, 524, 525, 527, 528, 529, 530, 531, 532, 533, 534, 535, 536, 538, 539, 540, 541, 542, 543, 544, 545, 546, 547, 548, 549, and 550 credit score are among the range of credit scores covered in this article.
Auto Credit Express & Other Resources
We hope you’ve found our guide useful. “5 Car Loans for Credit Scores Between 500 and 550 (Jan 2024)” to be helpful in meeting your financial needs. Visit the Auto Credit Express website to get all the information you need to know about this guide’s best option, Auto Credit Express.
With a 4 out of 5, our experts rank Auto Credit Express as one of the greatest choices for auto loans for borrowers with poor credit. 9/5. 0 rating overall. Among its features:
- $1 billion worth of bad credit auto loans have been closed by a network of dealer partners.
- Specializes in bad credit, no credit, bankruptcy and repossession
- In business since 1999
- Easy, 30-second pre-qualification form
- Bad credit applicants must have $1500/month income to qualify
- See application, terms, and details.
For more resources comparable to this one, see “5 Auto Loans for Credit Scores 500 to 550 (Jan 2024)” guide, check out our other well-liked choices for people with poor credit:
Make sure you read and comprehend the terms before registering, whether you select Auto Credit Express or any other option in our auto loans category. One of the best financial decisions you can make is to take the time to thoroughly understand auto loans.
The average credit score of American consumers:
A poor credit score is typically regarded as being lower than:
The American age group with the lowest average credit score is as follows:
The Americans in the following age range have the highest average credit score:
The percentage of U. S. adults who are considered to have bad credit:
| Bad* | Fair* | Good* | Excellent* |
|---|---|---|---|
| 350-650 | 651-700 | 701-750 | 751-850 |
FAQ
How hard is it to get a car with a 500 credit score?
Range of credit scores: Average APR for new cars; Percentage of loans obtained; Prime (661-780)6 88%45. 90%Nonprime (601-660)9. 29%17. 10%Subprime (501-600)11. 86%12. 67%Deep subprime (300-500)14. 17%1. 51%.
What is the lowest credit score to buy a car?
The majority of borrowers who apply for used auto loans have credit scores at least 675. Most borrowers with new auto loans have scores of about 730. A new car may require a minimum credit score of about 600, but excellent credit frequently results in lower rates and monthly payments.
How much can you borrow with 500 credit score?
With a 500 credit score, you can probably borrow between a few hundred dollars and $50,000. In addition to your credit score, other variables that affect the precise amount of money you receive include your income, employment status, the kind of loan you receive, and even the lender.
Is 500 a good credit score for a car loan?
According to Experian data, if you have a credit score of at least 500, you can see rates on a used car of roughly 2021 percent when compared with 2013 percent for a credit score of 651 percent. With a $20,000 five-year used car loan and a credit score of 650, the borrower would pay $7,304 in interest over the course of the loan in addition to approximately $455 in monthly payments.
Read More :
https://www.badcredit.org/how-to/auto-loans-for-500-to-550-credit-score/