Can You Finance A Car With A 500 Credit Score?

Yes, auto financing with a 500 credit score is possible, but expect steep rates, larger down payments, and tighter terms.

You came here to find out if an auto loan is even on the table with a score near 500. It is. The tradeoff is price: lenders view this band as high risk, so approval often comes with double-digit APRs, bigger cash due at signing, and strict verification. The good news: with the right prep, you can land wheels you can afford today and set up a refinance plan for later.

What A 500 Score Means For Car Financing

Most scoring models run on a 300–850 scale. A number near 500 sits in the “subprime” bucket used by many auto lenders. That label doesn’t end the story; it just changes the math and the paperwork. Expect lenders to look closely at income, stability, and the vehicle you pick. Many will approve only certain cars, caps on mileage, and shorter terms.

Rates swing with the market. Recent industry roundups show double-digit averages for borrowers below prime, with used-car rates often running higher than new-car rates. That’s why comparison shopping and a realistic budget matter from the start. See the quick landscape below before you step into a showroom.

Best Routes To Get Approved

These are the common paths buyers with bruised credit use. Start with the top two if you can; they often cost less over the life of the loan.

Source	What You Get	Tradeoffs
Credit Union	Member-first underwriting, preapproval, soft-pull prequal at some branches	May limit age/mileage; membership needed
Bank (Local/Regional)	Preapproval and predictable terms	Tighter tiers; may decline very low scores
Franchise Dealer Lenders	Access to a network of lenders that accept lower tiers	Markup risk; watch the APR and add-ons
Independent/Subprime Lender	Programs designed for past missteps or thin files	Higher APRs; strict proof of income and residency
Buy-Here-Pay-Here Lot	Financing on the spot with low documentation	Highest cost and limited car selection; proceed with care
Online Marketplaces	Shop many lenders at once with soft-pull prequal	Offers vary; still verify fees and conditions

Financing A Vehicle At A 500 Credit Score—What Lenders Check

Lenders weigh far more than a three-digit number. Expect a review of:

Income & Stability: Pay stubs or bank statements, time on job, and total monthly debt.
Down Payment: Cash reduces risk and can shave the APR. Aiming for 10%–20% helps.
Loan-To-Value (LTV): Lower LTV means less risk. A cheaper car or bigger down payment keeps LTV in range.
Vehicle Choice: Age, mileage, and trim matter. Many programs cap miles and require clean titles.
Residency & Insurance: Proof of where you live and an active policy are near-universal asks.

Price Reality: Rates And Terms You Might See

Market snapshots from recent reports show average auto loan rates moving from single-digit for prime applicants up into the teens for subprime tiers, with used cars priced higher than new. That gap reflects risk and resale value. The spread also widens when terms stretch past 72 months.

To keep the total cost within reach, many buyers lean on preapproval and shop the APR across several sources before visiting a dealer. You can read plain-language guidance on loan shopping in the CFPB’s auto loan hub, and a step-by-step checklist in the CFPB’s auto loan guide.

Documents Lenders Ask For

Bring a small folder. Two pay stubs or an employer letter, three months of bank statements, a utility bill or lease for where you live, and a list of your current debts will answer most questions at the desk. If your income varies, gather a longer trail such as 1099s and a year-to-date ledger. Self-employed buyers can add a simple profit-and-loss statement and recent tax returns.

Leasing With A Low Score

Leases tend to favor higher scores and lower risk. A number near 500 often misses the mark for captive programs. Some independent lessors may approve with big cash due and steep money factors, but that can cost more than a modest used-car loan. If you’re set on leasing, build your score first or look at a lease-buyout on a reliable model after you’ve raised your profile.

Insurance And Add-Ons: What’s Worth It

Full coverage is usually required when you finance. GAP can be helpful on long terms or high-LTV deals, since a total loss early in the term can leave a balance after the insurer pays. You can shop GAP through your own insurer or a third party and compare prices. Service contracts vary widely; read the exclusions and ask where you can take the car for repairs. Rustproofing, VIN etching, and paint packages add little value for most buyers.

Build A Preapproval That Works

Preapproval sets a price ceiling and saves time at the desk. Here’s a tight plan that fits a low-score profile while keeping payments livable:

Pick A Realistic Price: Cap the out-the-door total at a number your monthly budget can carry even with a high APR.
Save Cash: Every dollar down cuts finance charges. Trade-in equity counts.
Shortlist 3–5 Lenders: Start with a local credit union and one bank, then add one online marketplace and a dealer’s captive lender.
Time Your Applications: Submit full applications within a short window so the hard inquiries count as one scoring event.
Bring Proof: Two recent pay stubs, three months of bank statements, a utility bill, and insurance cards speed things up.

Car Choice That Helps Approval

The car you pick can make or break approval. Safer picks include base trims with modest miles, non-luxury brands, and vehicles that hold value. Price discipline beats bells and whistles. Pick models with known reliability and cheap parts; lenders like assets that will last the term.

A 90-Day Plan To Improve Your Offer

Scores move when data moves. A short, targeted sprint can bump a borderline profile into a better tier:

Pay Down Revolving Balances: Dropping card utilization can show up on the next statement cycle.
Dispute Errors: Pull all three reports and fix wrong limits, late marks you can document, or mixed files.
Add A Co-Signer: A strong co-applicant can swing the APR and raise the max loan amount.
Build Proof Of Income: Direct deposit, steady hours, and clean bank activity give lenders comfort.
Pick A Cheaper Stopgap Car: Drive it for a year, make on-time payments, then refinance or trade when the score climbs.

Shop Like A Pro: Steps That Protect Your Wallet

Get Prequalified Softly: Use lenders that let you preview rates without a hard pull.
Compare The APR, Not Just The Payment: A small payment drop can still hide thousands in interest.
Ask For The “Out-The-Door” Number: That means price plus taxes and fees, before any add-ons.
Bring Your Own Financing To The Dealer: If the dealer beats it cleanly, great. If not, you still have a lane.
Sign Only One Contract: Avoid any unsigned “we’ll finalize later” forms.

Watch For Yo-Yo Financing

Some stores let you drive off before the financing is final, then call you back to raise the rate or change terms. This is often called “yo-yo” or “spot delivery.” It’s safer to leave only when the contract is final and you have copies of every page. If a dealer calls you back, ask what failed, decline extras you didn’t want, and be ready to return the car if the terms no longer match your contract.

Approval Odds: What Helps, What Hurts

Helps: Bigger down payment, verifiable income, stable address and job, and a reasonable car choice.
Hurts: Open collections, many recent late payments, a car that’s too expensive for your budget, or a term beyond 84 months.

Common Missteps That Inflate The Bill

Chasing The Longest Term: Stretching to 84 or 96 months lowers the payment but piles on interest and traps you in negative equity.
Letting The Dealer Pick The Budget: Set your cap before you arrive. A bigger approval limit isn’t a goal; it’s a ceiling to ignore.
Skipping A Prepurchase Inspection: A quick inspection on a used car can save thousands in repairs and helps you pick a model a lender will like.
Rolling Old Debt Into The New Loan: Negative equity from a trade can sink your LTV and push the rate up.

If You’re Denied: Reset And Try Again

Ask the lender why the file missed the mark. Common reasons include thin income after debts, high LTV, or late payments in the last six months. Fix the item that blocked the approval, then retry with a smaller loan amount, a different car, or a co-applicant. A 30-day pause to clean up one issue can change the result.

Refinance Roadmap Once You’re Rolling

The first loan doesn’t have to be your last. Six to twelve months of on-time payments can open better doors, especially if you also trim card balances and remove errors. When your score jumps, rate-shop again. A refinance that drops the APR by a few points can save thousands and steady the budget. Keep full coverage in place if your lender requires it.

Sample Payments At Subprime Rates

These are rounded payment ranges for common price points. Taxes and fees vary by state; these figures assume average DMV costs and a modest doc fee. Use them to test your budget before you shop.

Car Price & Down	Sample APR & Term	Est. Monthly Payment
$15,000 with $2,000 down	18% for 60 months	$330–$360
$22,000 with $3,000 down	19% for 72 months	$420–$460
$30,000 with $5,000 down	20% for 84 months	$520–$570

Checklist You Can Use Today

Set a firm budget with room for insurance, gas, and repairs.
Save a down payment equal to taxes and fees plus at least 5% of the car price.
Pull all three credit reports and fix errors before you shop.
Get two preapprovals and carry them to the dealership.
Pick a dependable, lower-priced model that fits the program rules.
Double-check every figure on the contract before you sign.
Auto-pay the loan and track your score for a refinance window.

Main Takeaways For Low-Score Car Loans

You can get financed with a score near 500. The car choice, the down payment, and the lender you pick steer the outcome. Shop the APR, not just the monthly number; keep the term as short as your budget allows; and set a clear plan to refinance when your credit heals. That approach keeps you mobile now and protects your money tomorrow.