A credit score hovering around 500 may limit your auto financing options, but it doesn’t have to put your car-buying plans on hold. While this score falls into the “deep subprime” range, there are still finance providers and dealers who will work with borrowers with less-than-perfect credit.

The key is understanding the challenges you’ll face and taking smart steps to improve your chances of approval with manageable finance terms. Below is how you can navigate the process with confidence.

1. Be prepared to pay a higher interest rate

A credit score of approximately 500 signals increased risk to auto financing providers. As a result, you’ll probably face strict requirements, limited financing options, and high interest rates. According to industry data, average annual percentage rates (APRs) for borrowers in the 300–500 credit range are roughly double to triple what buyers with prime credit (661–780) pay. This penalty can significantly increase the total cost of your financing and monthly payments.

2. Help yourself through down payments, co-signers, and specialized financing

When you're applying for auto financing with a low credit score, it’s important to find ways to reduce your perceived risk. A larger down payment does just that. By lowering the total borrowed amount, you not only improve your chances of getting approved, but you may also qualify for slightly better interest rates. A 10-20% down payment is a good target, if possible.

Adding a co-signer is another way to improve your chances of approval. If you know someone with stronger credit and a steady income who is willing to share legal responsibility, your approval odds and finance terms may improve significantly.

You should also consider companies that specialize in subprime auto financing. These providers understand the needs of borrowers with lower credit scores and may be more flexible in structuring auto financing. Many also offer prequalification tools that let you compare offers without a hard inquiry, helping you shop with confidence.

3. Focus on your debt-to-income and loan-to-value ratios

Auto financing providers don’t only look at credit scores. They also consider how much debt you carry in relation to your income (debt-to-income ratio) and how the amount you want to borrow compares to the car’s value (loan-to-value ratio). Lower numbers in both categories make you a more attractive borrower.

To strengthen your application, focus on reducing existing debts and increasing income wherever possible. A debt-to-income ratio below 36% is often considered favorable.

Preparing for the process: What you can do in advance

If you’re pursuing auto financing with a 500 credit score, be proactive by:

• Checking your credit report for errors that could drag your score down. Disputing any inaccuracies can provide a quick score boost.

• Making on-time payments on your existing accounts. A positive payment history reassures financial institutions that you’re responsible.

• Avoiding multiple hard credit inquiries. Instead, use prequalification tools to explore your financing options with minimal impact on your credit.

• Collecting pay stubs and other employment documentation you’ll eventually need. Auto financing providers want to see that you have a stable income.

Know what you’re up against by pre-qualifying today

Credit Acceptance works with a nationwide network of over 15,000 dealerships that specialize in helping customers of all credit backgrounds find auto financing. If you’re ready to take the first step toward car ownership with a partner that understands your situation, get pre-qualified now.