Even if you have bad credit, it's possible to find an auto loan. Keep reading to find out how you can get a car loan with bad credit. 

Did you know that even people with bad credit can still get a car loan? Of course, you may have to spend time researching your options if you want to find the best interest rates. If you're in the market for a new car but have bad credit — don't worry! Keep reading to learn more about how you can get a car loan even with bad credit. 

Check Your Credit Score 

Before applying for car loans, it's a good idea to find your credit score and what you're working with. There are several different credit scoring methods; however, FICO and VantageScore are the two most commonly used. Scores range from 300 to 850; however, each scoring model has its own version of credit tiers. As a general rule of thumb, the higher the score, the better interest rates and offers you're more likely to receive. If your credit score is below 600, you're more likely to be viewed as risky by lenders and be charged higher interest rates. 

There are many ways that you can get your credit report for free. Websites such as NerdWallet offer free credit reports, or you can sign up for a paid service that regularly checks your credit. These services can be helpful, as they alert you if someone applies for credit in your name.  

Once you know your credit score, you have a starting point. If you notice any errors on your report, you can also request that they are corrected. 

Show Loan Affordability

Before they approve your auto loan, lenders want to know that you can afford to make your payments on time and won't default on your loan. To help determine this, they may consider previous loans you've taken out and look at your payment history. If you paid on time and didn't default, they're more likely to approve your loan. On the other hand, if you have a repossession on your payment history, they're unlikely to approve your loan. 

To approve your loan, a lender may request some of the following:

• Proof of income: Pay stubs that state your earnings can help provide a lender with proof of income. Ideally, lenders want to see a single source of steady income through regular employment. Some lenders will also consider additional sources of income, for example, child support, Social Security, and disability payments. 
• Debt-to-income ratio (DTI): Debt-to-income ratio is calculated by taking your monthly financial obligations and dividing the total by your gross pay. You may have difficulty finding a lender if your DTI is over 45%. However, if you've paid off credit accounts and they're lower than your credit report suggests, be sure to provide evidence of this.
• Low credit utilization: Lenders like to see borrowers using 30% or less of their available credit. If your credit usage is higher than this, you may have trouble obtaining a loan.
• Payment history: How long you've had an active credit history, plus your history of making payments, also affects the lender's decisions when approving an auto loan. If you have any late payments in your history, it's essential to be able to explain why.

Borrow As Little As You Can

The less you borrow, the less risk you are to your lender if, for any reason, you default on your loan payment. If you have the ability to reduce the amount you borrow, you can improve your chances of receiving loan approval. 

Some ways to help you borrow less include: 

• Making a larger down payment: Most lenders require some sort of downpayment. Putting down a larger down payment reduces the amount you have to borrow and also lets the lender know you're financially committed.
• Trade-in your existing car: If you have a car to trade in, you may be able to reduce the amount of money you need to finance. Be sure to discuss your options with your lender. 

Comparing Lenders to Get the Best Auto Loan

Regardless of your credit score, comparing lenders' terms and conditions is always a good idea. Getting pre-qualified with multiple lenders can put you in a great position to get the best deal. Be sure to search online and find lenders who approve loans for people with bad credit. 

If you find you can't get approved for an auto loan due to your bad credit, or the rates are simply unaffordable, it may make more sense to postpone until you can improve your credit score. Repairing your credit can make a huge difference in whether you're approved and the interest rate you're offered. With hard work and dedication, you can typically improve your credit in six to 12 months with consistent on-time payments and keeping your revolving credit usage low. 

Start your search online for bad credit auto loans today and find great rates with flexible lenders!