Traditional Lender Requirements

• Traditional lenders, such as banks and large finance companies, will require fair to good credit in order to issue a loan. This score range is between 620 and 700. If you are on the lower end of this range, the lenders may place extra requirements on your loan, including a cosigner, a large down payment, a loan that has a shorter maturation period or a high-interest rate. If you cannot qualify for the loan based on these requirements, you may need to seek an alternate option.
  
  

Alternative Lender Requirements

• Alternative lenders include car dealers and manufacturers, online lenders and dedicated high-risk lenders. Of these options, the car manufacturers often have the best rates for someone who has a credit score below average. The manufacturers, such as General Motors Acceptance Corporation for GM vehicles or Nissan Motor Acceptance Corporation for Nissan vehicles, have an incentive to make the loans: they want to sell the vehicle. Therefore, their interest rates may be lower than other alternatives. However, even these companies will turn away from a borrower whose score is below 620. High-risk lenders will be more willing to work with borrowers in this situation. They will compensate for the risk with very high interest rates and large penalties for late, missed or early payments.
  
  

Checking Your Score

• You can check your score by going directly to one of the three credit bureaus or use a third-party service. The three bureaus are Experian, Equifax and TransUnion, and each has a website for easy access. Using a third-party service, such as FreeCreditReport.com, will give you the option to review scores from all three bureaus at once. It may not be necessary to access all three scores because the scores should be very similar.
  
  

Improving Your Score

• If your score is too low to qualify you for an auto loan, try small steps to improve the score before seeking financing. One step is to pay down balances on your credit cards. Closing the cards all at once can drop your score, but paying down balances to below 10 percent will boost your score slightly. Delinquencies are the single biggest factor in dropping a score. If you wait until your delinquency expires, which takes about two years depending on your state, your score will also improve.
  
  

Finding a Loan

• Once you have a score of at least 620, but preferably in the high 600s or low 700s, you will have general freedom in securing financing. If you have a lender you currently work with, such as your bank, this is a good place to start in getting an auto loan quote. You may also ask the dealer you are purchasing the car from. Often, dealers can offer more competitive rates than traditional lenders.