Minnesota Bad Credit Auto Loans (MN)

Has your FICO score seen better days? Don’t worry. We can help! We can get you approved for financing through our extensive network of Minnesota lenders and dealers. When you submit an application online, we go to work getting you approved by a dealer or lender who’s ready to finance your loan. There are zero costs or commitments, and same day approvals are quite common.

MN Approval Qualifications

  • Resident of Minnesota.
  • Weekly income of $375 (pre-tax).
  • Employed for a minimum of 12 months.
  • All bankruptcies discharged.
  • No repossessions in last year.

MN Vehicle Requirements

Vehicle restrictions vary from dealer to dealer. However, we can offer a few requirements based on our industry experience.

  • New or pre-owned vehicles.
  • Mileage of 75,000 miles or less.
  • Vehicle a maximum of 6 years old.
  • Minimum loan of $7500.

Many loan companies want you to buy your vehicle from a dealer with whom they have a relationship. If you’re approved through a dealer, then, understandably, they will want you to purchase a car or truck from their showroom.

MN Down Payments for Bad Credit

Unfortunately, down payments are often a requirement when financing a car with below-average credit. They reduce the risk for the loan provider, because if the borrower defaults, they have a better chance of recovering their investment. For you, the buyer, there are benefits as well. You will pay less in overall interest, simply because you’ll be financing less, and you’ll have less risk of being upside down on the loan as well. That being said, there are lenders who offer zero down auto loans for people with poor credit. If your loan officer or finance manager offers you this option, don’t plan on trading in the vehicle before it’s paid off. This could lead to a negative equity situation.

Will This Raise My Credit Score?

An auto loan is actually one of the strongest ways to boost your FICO score, but keep in mind: you have to repay it as agreed. It will show lenders that you’ve become a responsible consumer, which means lower annual percentage rates in the future. Missing or late payments, on the other hand, can really damage your credit, so you want a monthly payment you can easily afford, not one that costs you an arm and a leg. While most experts encourage spending approximately 18%-20% of your income on vehicles, no more than half of that (10%) should be put toward your car payment. By way of example, let’s look at the average numbers for Minnesota residents.

  • Monthly Income: $2,555
  • Total Vehicle Budget: $460
  • Recommended Payment: $255
  • Remaining Funds for Fuel, Maintenance, etc: $204

Of course, you must scale this formula to your own income.

Subprime Auto Loan Rates in Minnesota

Steeper APR rates are to be expected when you have a credit score of 620 or less. Individual interest rates vary widely based on several different factors, including your loan provider, credit score, vehicle type, financing term, and other factors. Here are a range of rates based on our experience in the industry.

FICO Used Vehicle APR New Vehicle APR
660-689 6.8% 6.5%
620-659 10.1% 10.2%
590-619 16.3% 15%
500-589 18.1% 17%

Obviously, these rates are quite steep. Luckily, there are a number of things you can do to reduce the total interest you end up paying. First, avoid a longer financing term like 60 or 72 months. The more time it takes pay off the vehicle, the more you’ll pay in interest. Next, supply a down payment. Not only will this decrease how much you need to borrow, it will help to limit negative equity. If you want to pay less in finance fees, consider the following:

  • Go with 3-4 year financing. The shorter your loan, the less you’ll pay in interest.
  • Offer a down payment. Down payments help limit the size of your loan, and therefore the amount of interest you pay on it.