If you have a credit score of 500, you might think getting a car is out of your reach and budget. Perhaps you have been denied loans before, or you might have been told that banks don’t lend to people with poor credit. But the reality is that you can still purchase a car with a credit score as low as 500. You simply need the right approach to understand your financing choices and get prepared so lenders will trust you.
Daily, thousands of people with poor credit scores successfully buy cars within their budget. Whether you need a vehicle for work, family, or just daily life errands, your credit score doesn’t have to stop you.
This guide will help you understand your options for a 500 credit score, how it impacts your car-buying experience, and what you can do to improve your chances of getting approved.
Understanding a 500 Credit Score
A credit score is a three-digit number that represents your creditworthiness, basically, how risky you appear to lenders. Scores range from 300 to 850, and here’s the general breakdown:
Excellent: 750–850
Good: 700–749
Fair: 650–699
Poor: 300–649
A 500 credit score falls into the “poor” category. This usually happens because of things like:
Late or missed payments on loans or credit cards
High credit card balances compared to limits
Unpaid debts sent to collections
Bankruptcy or foreclosure
Limited or no credit history
Lenders treat a low score as a warning that you might default on payments. This makes them either reject your application outright or give you loan terms with higher rates and stricter conditions.
Can You Buy a Car With a 500 Credit Score?
Yes, without question. While you won’t get the premium deals or rates available to excellent-credit buyers, specific lenders and dealers work exclusively with people who have credit challenges.????????????????
Some dealerships even advertise programs asking, “Can you buy a car with a 500 credit score?” to let customers know they understand credit problems and have ways to help.
The main difference is that you may have to:
Make a larger down payment
Pay a higher interest rate
Choose from a smaller selection of vehicles
Show more proof of income and stability
500 Credit Score vs. Higher Score: What Changes?
Here’s a side-by-side look at how your credit score impacts the car-buying process:
Factor | 500 Credit Score | 700+ Credit Score |
Loan Approval | Possible, but fewer lenders are available | Easier, more lender choices |
Interest Rate | High (12%–20% or more) | Low (4%–6%) |
Down Payment | Often 10–20%+ required | Sometimes $0 down is possible |
Vehicle Choice | May be limited to certain models | Wider selection of cars |
Monthly Payment | Higher due to interest rates | Lower, more manageable payments |
Although better credit scores provide improved loan terms, a 500 score doesn’t close off car ownership completely; you simply need to accept the available options.
Step-by-Step Guide to Buying a Car With a 500 Credit Score
1. Set a Budget You Can Actually Afford
Before shopping for a car, figure out:
How much you can pay upfront as a down payment
How much you can afford monthly for the loan
The cost of insurance, fuel, taxes, and maintenance
A good rule is to keep your monthly car payment under 15% of your take-home pay.
2. Save for a Larger Down Payment
With a 500 score, a bigger down payment makes lenders more willing to approve you. It shows you’re committed and reduces the loan amount.
For example, if the car costs $12,000:
A $2,500 down payment means you only have to borrow $9,500
A smaller loan amount = less risk for the lender and more affordable monthly payments
3. Gather Proof of Income
If you have low credit, lenders require evidence of your ability to pay. Bring:
The more stable your income appears, the better your approval chances.
4. Shop at the Right Dealership
Not every dealership works with low-credit customers. Look for:
5. Consider a Co-Signer
When someone you know with better credit co-signs your loan, this can:
6. Choose a Practical, Affordable Car
It’s smarter to choose a reliable used car within your budget rather than stretching your loan for something more expensive. This makes:
7. Review the Loan Terms Carefully
Before signing, check for:
How to Improve Your Approval Chances
Having a 500 score doesn’t mean you can’t improve your approval odds by:
Paying off small debts before applying
Avoid any new credit applications before your loan
Showing steady employment history
Offering trade-in value from your current vehicle
Why Some Lenders Work With Low-Credit Buyers
Not all lenders look only at your credit score. Special finance lenders understand that bad credit can happen for many reasons, such as:
Instead of focusing only on past mistakes, they look closely at your current situation.
They often base approval on:
Your ability to make payments now – Do you have a steady income that can cover the loan?
How steady your job is – Have you worked at the same place or in the same field for some time?
Your down payment amount – Larger down payments reduce the lender’s financial risk.
What kind of car do you want – Basic, dependable vehicles are much easier to get financing for than costly luxury cars.
This is why finding a dealer that partners with lenders who help people with bad credit matters so much. The right dealer can connect you with a loan program that works for your specific needs.
Life After Buying a Car With Bad Credit
Qualifying for a car loan with low credit is only the starting point. How you use your payments can have a significant impact on raising your credit score and creating access to better financing deals.
Make every payment on time – Payment history matters most for your credit score. Just one late payment can hurt your score and make getting future loans harder. Always pay by the due date or earlier.
Try automatic payment setup – This prevents missed or delayed payments by automatically transferring funds from your account each month.
Add extra cash to your payment when you have it – Extra payments reduce the amount you owe faster, helping you own the car sooner and cut down on interest costs.
Look into new loan options after 12 to 18 months – If you’ve proven you can pay on time consistently, your credit might be strong enough to qualify for better rates and lower payments.
Managing your car loan well will protect you from losing your vehicle and help rebuild your credit for future financial opportunities.
Bottom Line
Having a 500 credit score makes car buying harder, but you can still do it. By using smart tactics, putting more money down, showing proof you earn income, finding the right dealer, and selecting a sensible vehicle, you can get approved and begin improving your credit.
If you’re ready to work with a dealership that understands your situation and offers financing for buyers with all types of credit, visitMi Amigo Motors today.
