Happy Car Buyer

16 Sep

Bad Credit? How to Get a Car Loan

If you need a car but are working with poor credit, then a credit union is a great first place to start. We understand that keeping a good credit score can be difficult when you always feel like bills are piling up and emergencies keep popping up. From medical bills to appliances breaking… it can feel never-ending. 

But, that doesn’t mean you have to feel defeated by these financial challenges. Read this article to help you take back control!

Hear from our Signet Loan Officers to gain insight on car loans and what to do if you have poor or no credit. 

  • Is there a credit score that’s too low to qualify for a loan?

No, but understand your credit score impacts the interest rate you’re eligible for. Also, note that credit scores are not the only factor that’s taken into account when you’re applying for a loan. 


  • What are simple ways to increase a credit score?Getting a Car Loan
    • Pay your bills on time. 
    • Don’t close unused credit cards. You don’t have to use it, but don’t close it either. Closing will count as an action on your credit and could negatively impact your score. 
    • Keep balances low on open credit cards.


  • Why is a credit union a great choice for those with poor credit? 

Members are more than an account number. Credit unions are people helping people. If you’ve had a hiccup in the past, but are moving forward from it, we understand. None of us are perfect, but it’s how you respond to a situation. Credit unions seem to be better at giving people a second chance. We also offer suggestions to help you continue on your way to better credit. 


  • If they’re just starting out, what can they do to build their credit?
    • If someone in your family has a good credit history, become an authorized user on their credit card. 
    • Consider taking out a share secured loan. This will help establish pay history and is considered a low risk loan for the credit union since it’s based on the savings you already have in your account. 
    • If you don’t have any credit, you may need a cosigner on your first loan. Once you’ve built up your credit, you can take out loans on your own. 


  • What should they know about cosigning with someone?

The loan can help both the primary borrower and the cosigner build positive credit history if they make all payments on time. The opposite can be true if the primary borrower misses payment deadlines. If late or missing payments occur, the lender will expect the cosigner to make the payments. 

The cosigner needs to keep in mind that this payment will show in their debt to income equation. Also, this could hinder their ability to borrow money as the cosigned loan is now figured into their personal debt to income ratio.  


  • Can someone refinance their car loan later if their credit score rises?

If their credit score has gone up they could look into refinancing the car in their name only. This would depend on a new loan application. At Signet, we offer a one time rate and payment adjustment (fee charged) during the life of a loan if the borrowers’ credit score improves to the next credit score tier level.

Talking at a Signet Branch

As a member, your credit union is a great resource for financial information and guidance when you’re working to raise your credit score. The best thing to do is to keep paying your bills on time and establish a great pay history, even if you don’t have much expendable income. 

Then, build a plan for getting a car and paying it off without defaulting on any of your loans. We recommend building up your emergency savings before taking out a loan. 

Want to learn more about getting a car loan? Call us at (800)795-2555 or apply online to start the conversation. 

We have the following information available to you as well: