Bad Credit Auto Loans in Kentucky (KY)

Are you in the market for a new or used car, but your credit score is 620 or lower? Well, you aren’t alone. More than 25% of Kentucky consumers are thought to have credit scores low enough to be classified as subprime. That can make it hard to get approved, and ever harder to secure a reasonable rate of interest, but we’re here to help. Many dealers now have special financing departments dedicated to lending to applicants with subprime FICO scores, and we can connect you with them. Simply apply online, and our dealers and lenders compete to fund your loan, which helps increase your odds of approval. Our system is quick and easy, and there are no obligations or hidden fees.

Auto Loan Rates in Kentucky for Bad Credit

Inflated APR rates are a fact of life when you have a credit score of 620 or less. Actual interest rates vary widely based on several different factors, including your lender, FICO score, vehicle type, loan term, and other criteria. Here are a few estimations based on our industry experience.

FICO Used Vehicle APR New Vehicle APR
660-689 8.1% 6.9%
620-659 10.7% 11.9%
590-619 16.8% 17%
500-589 24.5% 18.2%

These rates are in no way guaranteed to be accurate–they are simply informational. But, as you can see, they show you how expensive it can be to finance a car with bad credit in Kentucky. To help minimize the amount you wind up paying in interest, you can offer a down payment and choose the shortest lending term possible. You should also check your credit report for errors, and pay down any credit card debt you can. This will lower your debt-to-income ratio, which is an important factor when lenders are determining what interest rate to charge you.

Minimum Approval Requirements for Kentucky Residents

  • Resident of Kentucky.
  • Weekly income of $375.
  • Employed for no less than 1 year.
  • Any bankruptcy discharged.
  • No repossessions in last year.

You are still welcome to apply if you don’t meet these requirements, but your chances of approval are not as good.

What Kind of Vehicle Can I Purchase?

Vehicle restrictions vary from lender to lender, but we can offer a few guidelines based on our industry experience.

  • Vehicles can be new or pre-owned.
  • Mileage of 75,000 miles or fewer.
  • Vehicle not more than 6 years old.
  • Minimum loan amount of $7500.

Generally, you won’t have a “blank check” car loan. Rather, you will need to buy your vehicle from a particular dealership or network of dealerships.

What About Down Payments?

Many dealers and lenders who approve people with bad credit do require a down payment. That’s because they lessen the risk for the loan company, because if the borrower defaults, they have a better chance of recovering their losses. As a buyer, you will owe less in total interest, simply because your loan will be smaller, and you won’t be quite as vulnerable to negative equity. You might have seen no money down, “sign and drive” specials advertised on the radio or TV. If your dealer or lender offers you this option, just make sure you don’t plan on trading in the vehicle before it’s paid off. This could lead to a negative equity situation.

Can This Raise My Credit Score?

It’s true, financing a vehicle can rebuild your credit – as long as you keep making the payments. What’s more, you won’t have to wait until the pay off event to benefit from such a boost. Making your payments every month will do the trick. Of course, this is a double-edged sword. If you miss even a single payment, you could quickly exacerbate your already-weakened credit score. We endorse investing not more than 10% of your income in your monthly payment. This will help ensure that you can continue making payments, even if you run into some financial difficulties. To give an example, let’s consider the average numbers for Kentucky residents.

  • Monthly Income: $1,919
  • Total Vehicle Budget: $345
  • Recommended Payment: $192
  • Remaining Funds for Fuel, Maintenance, etc: $154

This is simply an example, of course, but it shows you how to calculate a sensible monthly payment.