Michigan Bad Credit Auto Loans

Having problems getting approved for financing on account of a low credit score? You certainly aren’t alone. More than 25% of US consumers have bad credit, and we’re here to help. Many dealerships now have special financing departments that support applicants with poor FICO scores, and we make it easy to get approved. When you apply online, we go to work finding you a dealer or lender wants to finance your loan. There aren’t any costs or commitments, and same day approvals are quite common.

Michigan Interest Rates for People with Bad Credit

There is no getting around the fact that lower credit ratings mean loftier annual percentage rates. Your specific interest rate will depend on quite a few factors, including your loan provider, credit rating, type of vehicle, financing term, and other factors. Here are a few estimates based on our experience in the industry.

FICO Used Vehicle APR New Vehicle APR
660-689 8.31% 6.65%
620-659 13.49% 9.81%
590-619 21.73% 13.23%
500-589 24.33% 15.59%

If these rates seem high, they are. To help decrease the amount you end up paying in interest, you can offer a down payment and opt for the shortest repayment term you can.

Approval Criteria

  • Valid Michigan drivers license.
  • Annual income of $18,000.
  • Employed for a minimum of 12 months.
  • Any bankruptcy discharged.
  • No repossessions in the past year.

Vehicle Restrictions

This varies from company to company, but we’ve listed a few of the common requirements below.

  • Vehicles may be new or used.
  • Not more than 75,000 miles on vehicle.
  • Vehicle no more than 6 years old.
  • Minimum loan amount of $7500.

Typically, you will not have a “blank check” auto loan. Instead, you will have to select your vehicle from a particular dealership or network of dealerships.

Do I Need a Down Payment?

As much as we’d like to tell you otherwise, down payments are often a requirement when financing a car with poor credit. The good news is, down payments have several advantages:

  • Increased chances of approval.
  • Size of loan is lowered.
  • Less paid in total interest.
  • Less risk of negative equity in the vehicle

Having said that, there are lenders who offer no down payment car loans for people with less-than-perfect credit. If your lender offers you such a deal, plan to drive the vehicle until it’s fully paid off, to prevent a negative equity situation.

Rebuilding Your Credit

So long as you make the payments as agreed, financing a car will improve your credit. Payment history is a crucial factor in your credit score. When you make your payments as agreed, this establishes your creditworthiness. For this reason, it’s important to finance a modest, budget-friendly vehicle.

To help keep your payments low, devote 10% of your income to your car payment, no more. As an example, let’s consider the average numbers for consumers in Michigan.

  • Monthly Income: $2,124
  • Total Vehicle Budget: $382
  • Recommended Payment: $212
  • Remaining Funds for Fuel, Maintenance, etc: $170

Spending more than 10% could end in delayed payments, delinquency, even default.

Car Loans in Michigan after Bankruptcy?

Bankruptcy has a severe impact on your credit, but you may be able to get approved for a car loan after bankruptcy.  Typically, the bankruptcy must be closed – sometimes for two years – or you may have to request and proffer an authorization to incur debt from the attorney who acts as the trustee for your case.  To learn more, apply online, indicate that you have experienced a bankruptcy, and speak with your lender about your options.