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How do I get a car loan with a 540 credit score?
I want to get a car loan, but I have terrible credit. What can I do to increase my chances of getting approved by a lender?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Your credit score of 540 puts you firmly in the subprime range of credit scores. As a result, getting a
car loan
will be difficult—but it isn’t impossible. Most likely, you will have to put up with less-than-ideal interest and loan rates. Per Experian, as of September 2021 the average car loan rate for someone with your credit is 11.03% for a new car or 17.11% for a used car.
If you can afford to wait to buy a car, work on rebuilding your credit report before applying for the loan. If you can push your score above 600 (ideally above 660), you should see a significant drop in your projected interest rates.
If you need a car right now, you may choose to work with online lenders or a
buy here pay here dealership
. These lenders work specifically with those who have poor credit. Consider taking out such a loan, steadily making payments, and then trying for an auto refinance
to get lower rates down the road.Since you’re going to need full-coverage car insurance when you take out a loan, use the
Jerry
app to compare quotes in just minutes. With options from up to 50 top insurers, you’re sure to find the best rate without a hassle.View full answer
- Gregory R.
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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