If you’re struggling to be able to afford a new or even used car, you’re certainly not alone.

Recent studies have found that over the past 35 years, the average cost of a new vehicle has risen by 35%. However, the average wage for an American worker has only risen by 3%.

With rising prices of cars, gasoline, and even just your every day expenses continually on the rise, there’s a good chance that you’re not only unable to afford a car. There’s also a good chance that you have a considerable amount of debt.

This debt impacts your credit score — which you’re concerned means that you’ll never be approved for a car loan.


    Our take:Online marketplace to find you a personal loan offer that matches your needsAPPLY NOWCredit ScoreLoan Size/AmountLoan TermAPROrigination FeeAll can apply$100 – $15,0001 – 605.99% – 35.99%Varies by lender

The good news?

It is possible for you to find a bad credit auto loan that works for you—as long as you know how to apply for one and get approved.

Read on to learn how to make that happen.

Step One: Aim to Rebuild Your Credit

While there are lots of bad credit loans out there, you should still take the necessary steps to repair your credit as much as you can before you apply for a car loan.

There are several different things you can do to give your credit score a quick boost.

If possible, try to pay more than you owe on any outstanding credit card balances, or even make two payments in a single month.


    Our take:Online marketplace to find you a personal loan offer that matches your needsAPPLY NOWCredit ScoreLoan Size/AmountLoan TermAPROrigination FeeAll can apply$100 – $15,0001 – 605.99% – 35.99%Varies by lender

Remember that roughly 30% of your current credit score is made up of the debts you currently owe. Doing everything you can to reduce them will be a huge help.

If you truly cannot pay off your current debts, then get in touch with your lenders and ask for a credit limit increase.

If granted it, do not put anything else on your credit card. The goal is to lower the percentage of your credit limit, thereby improving your score.

Remember that being able to pay back your car loan on time and in the proper amount each month will boost your credit score as well.

Step Two: Look for Bad Credit Car Loans

Your next step is to begin your research on finding the right bad credit car loan for your needs.

This means considering your loan type options. Payday loans online, though popular for people with poor credit, likely won’t give you the amount of funding that you need to be able to finance a new car.

Instead, consider bad credit personal loans, which allow you to borrow $5,000 or more—and often don’t require a credit check.

Personal loans can actually be used for any kind of purchase you’d like to make. In other words, you don’t need to “prove” to the lender that you’re going to use the loan money to finance a car purchase in order to get approved.

Personal loans are also a wise choice because they don’t require you to put up any kind of collateral to be approved. This means that you won’t be at risk of losing your home if you’re unable to make your payments.

Instead, most personal loan lenders will just require you to have automatic loan repayments deducted from your current bank account.

Another benefit of personal loans?

You can get approval for them incredibly quickly (in large part because they don’t require a credit check.) This means that, in as few as 48 hours, you could have the cash in your hand that you need to buy a car.

You can also apply for instant loans online, which makes the entire application process much easier.

There’s one more thing that you need to understand about personal loans. Whether or not you get approved for one depends on your current income. This is what lets lenders know if you’re likely to actually be able to make those repayments every month.

In other words, just because personal loans don’t come with a credit check doesn’t mean that they don’t have other application requirements.

Let’s take a look at those now.

Step Three: Understand the Qualifications

So, what are the requirements for those who are looking to apply for a bad credit auto loan?

First of all, you must be at least 18 years of age. You also need to have an active bank account in the United States—in most cases, a checking account (this is so that lenders can make automatic deductions, and also where they’ll send the loan money once you’ve been approved).

You will also need to be able to prove to your lender that you have a current source of income that will make it possible for you to repay your auto loan. In most cases, this money will come from employment. However, it may also come from regular payments from investment accounts.

Be aware that, if you have another outstanding loan from the same lender under which you’re applying for the auto loan, you are not likely to get approved. You may also face serious challenges in getting an approval if you have failed to pay back a payday loan or other fast cash loan option in the past few years.

If this is the case, you may still be able to negotiate with your lender. Contact them directly to see if you can work out a plan that benefits everyone.

Finally, make sure that you always take the time to read bad credit loan reviews.

In some cases, disreputable lenders may try to charge you high and sudden fees, raise the interest rates, or make other changes to the terms of your loan.

By reading the reviews of the auto loans available to you, you’ll be able to avoid making a serious financial mistake.

What to Consider When Choosing Your Auto Loan

As of this writing, about 7 million Americans are 90 days or more behind on their car payments.

Especially if you already have less-than-perfect credit, you’ll need to think carefully about the terms of the auto loans you’re considering applying for.

First of all, meet with your family members and take a hard look at your current budget. Are there expenses you could cut back on in order to ensure that you’re able to make your monthly payments? How will the repayment on your loan every month impact the rest of your spending?

Most of all, is it truly financially feasible for you to apply for a loan at this time?

The golden rule of borrowing is to take the least amount possible.

Don’t be swayed by the fancier car models you may be able to buy if you take out a higher loan amount. It won’t be worth it in the end.

After all, cars, unlike homes, don’t appreciate in value over the years.

If you’ve determined that now is truly the right time for you to apply for a loan, next look at the loan’s interest rate. Lenders with strong credit scores (760 and above) will likely be charged less than 4% interest.

However, if you have poor credit, you can almost certainly expect to pay a higher interest rate. This is usually anywhere from 14-15% each month.

The interest rate will also depend on the length of the loan.

Longer loan terms usually have higher interest rates, but again, this will depend on your individual credit score.

Consider your future financial plans, and ask yourself if you truly want to be paying off your auto loan for the next 60 or 72 months. You may want to apply for a longer-term loan and pay it off early if possible.

Still, just be aware that some lenders may penalize you for early repayment.

Need to Apply for a Bad Credit Auto Loan?

We hope that this post has helped you to realize that, no matter what current financial hardships you may be facing, it is still possible for you to be approved for a bad credit auto loan.

Of course, you need to be certain that you’re getting the best possible loan terms, interest rates, and more.

We can help you to find the car loan that’s the right fit for you.

At Bonsai Finance, we work to connect you to the car loan opportunities that will make your life easier, even if you have bad credit.

In addition to car loans, we can also help you understand the application process for payday loans no credit checkinstallment loans, other kinds of personal loans, and much more.

Reach out to us today to get started, and remember to keep checking back in with our resource center for more invaluable lending tips.

Here are some additional articles you may enjoy:
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5 Steps To Getting A Payday Loan

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