Bad Credit Doesn’t Mean Automatic Auto Loan Rejection

Glasses and a pen sitting on an auto loan for people with bad credit in Louisville

Statistics estimate that roughly 30 percent of the American population has bad credit. If you fall into this category or think you might, you may have avoided stopping by an auto dealership or visiting to virtually test drive exciting vehicle makes and models. After all, isn’t it impossible to get an auto loan with bad credit in Louisville or anywhere else?

The answer is a clear–and perhaps surprising–“no”.

Bad credit doesn’t have to mean relying on public transportation, carpooling to the office because you have no other choice, or cycling 15 miles just to get to your workplace. In fact, you can get a car loan even if you don’t have any credit at all. You simply have to understand the process and work with the right type of dealership.

  • Making Sense of Credit Scores
  • To fully grasp the concept of what “bad” credit actually means, it’s important to get a baseline education on what credit scores mean. Credit scores can exceed 800 points and are essentially pared down into a few categories.
  • Although bad credit is usually associated with anything under 499 points, that isn’t always the case. Sometimes, people with fair credit who have scores between 601 and 660, or poor credit with scores of 500 to 600, may be lumped under the “bad credit” umbrella.
  • What this means to any lender is that the person likely has a history of one or more of the following:
  • Late payments or not fulfilling payment agreements with lenders
  • High percentage of debt, such as a large balance on a revolving credit card
  • High debt-to-income ratio, indicating that money-in doesn’t equal money-out
  • History of financial troubles, like filing for bankruptcy
  • Therefore, lenders are hesitant to provide auto loans to bad credit holders–in general. However, there are places that specialize in offering people an auto loan despite bad, fair, or poor credit reports and scores.


Advantages for Lenders of Auto Loans to Those With Bad Credit in Louisville

Given these facts, why would a lender even consider giving an auto loan to someone who exhibited bad credit? There are actually plenty of good reasons.

The first benefit to the lender is that many people with bad credit today are actively interested in increasing their credit scores. One of the best ways to do that is by taking out an auto loan and paying it back as-indicated without fail. Over time, staying conscientious and paying off all bills–as well as paying down other debts–influences a bad credit score. Thus, lenders may look at some bad credit holders as very likely to fulfill their contracts.

The second is that auto loan financiers can get a higher interest rate on auto loans for those with bad credit scores. This is not gauging or taking advantage of the car buying, but protecting the lender. After all, people with bad credit are statistically more apt to make payments late, or to default on their payments. Thus, the lender is ensuring that it’s making the risk worth its while. At the same time, consumers need to be aware that auto lenders cannot just charge sky-high interest rates. Rules govern the maximum auto loan interest rate allowable in each state.

The final advantage to lenders who specialize in helping those with bad credit is that they can grab a larger piece of the lending pie. Not everyone has good credit, and if 30 percent or more of the population has bad credit (or at least credit less than 660 or 600 points,) those people will be eager to work with a lender. Why shouldn’t a lender feel comfortable allocating a percentage of its lending to the bad credit market, especially with such high numbers of interested consumers?


What Buyers Can Expect From a Bad Credit Auto Loan

From the consumer perspective, it’s important to remember that getting a bad credit auto loan means taking a few steps and planning for several outcomes.

The lender will want to be able to run a credit report, so buyers must be prepared to have all their credit history revealed to the lender. The lender will not disclose the information contained in the credit history, of course, but will use it to make a judgment on the loan.

Buyers who know that they have extremely bad credit scores may want to make sure they either purchase used cars that are very low-priced or to put a large amount down. This keeps the actual loan amount to a minimum and increases the chances of getting the bad credit auto loan approved.

Additionally, consumers should always expect a high-interest rate. Even though the dealership may advertise extremely low-interest rates for new and certified pre-owned vehicles, the offer is always contingent on a high credit score. As mentioned previously, though, be aware that lenders cannot gouge customers with excessive interest rates.

Those new to the auto loan process may not realize that they are expected to adhere strictly to the loan repayment schedule. Missing even one payment may put them in a rocky situation, not only by hurting their already poor credit but by risking losing the vehicle. Thus, they need to have a plan to pay back the loan on time, every time–no questions asked. Any auto loan, whether it’s a specialty bad credit one or not, needs to be taken seriously.

Next Steps for Buyers Seeking a Bad Credit Auto Loan

If you’re living in the Louisville area and you know–or assume–that your credit rating is less than perfect, it may be time to connect with Examine the available vehicles throughout our curated listings. Remember that the lower the price, the less you’ll need to ask for your auto loan, which can make repaying easier and faster.

When you’ve discovered the right car, truck, SUV, hybrid, or other vehicle for your needs, use our online system to apply for your auto loan. You’ll not only get a response in very little time, but you can read through all the information to ensure that it’s what you want to pursue.

The bottom line is that you never have to worry about being unable to get the vehicle you need to make money and keep up with your lifestyle and responsibilities. Even if you have bad credit in Louisville–or anywhere else in the nation–you can always apply for an auto loan through