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Bad Credit Auto Loan

Daniel Cohen
UpdatedAug 17, 2010
Key Takeaways:
  • Learn how to get an auto loan with bad credit.
  • Shop around for the best auto loan terms.
  • Build your credit score to get a better auto loan.

I just paid off a car loan on which my Mom co-signed. Even with a low credit score, will I be able to get another car loan?

I recently just paid off my auto loan for a used car I got in 2005. My mom helped me out by cosigning it for me. It's on both mine and my mother's credit report. My credit score is 561. Will it be easier for me now to obtain an auto loan for a new car on my own if I stick with the same company I just finished with?

You are correct that your most recent lender could factor in your solid payment history with them, were you to apply for another car loan with them. Many auto loan lenders place a high value on how past car payments were made, in addition to looking at your overall credit score, some even more so when the loan was with them.

Still, it would not be surprising if you did not get much flexibility from the lender. The lender could look at the situation and calculate it was the presence of the co-signer that ensured the timely payments on the loan. Also, today's credit market is much different than it was four or more years ago. As a group, creditors are scrutinizing applications with warier eyes than they did years ago to spot signs of risk. A strong recent credit history will work in your favor. If, however, you have a history of late payments then you can expect to pay a higher interest rate on a loan or not be offered credit at all.

Get an auto loan with bad credit

The only way to find out what kind of loan you can obtain on your own is to shop around. Before you start shopping, I recommend you learn how to find an auto loan with bad credit.

Learn all about auto loans

I also recommend you read up on some solidgeneral information about auto loans. The more informed a consumer you are, the more likely that you will find the best deal out there.

Regarding your credit score, you should have seen your score rise if all of your car payments were made on time. That it is still 561, a poor score, should spur you to action. Please give some thought to how you can raise your FICO score. You may not always be able to obtain a co-signer and the faster you can establish your own credit worthiness, the sooner you will be able to get loans at the best rates available.

I hope this information helps you Find. Learn & Save.