Generally, most lenders adhere to a minimum amount for auto financing of $5,000 if you're taking out a bad credit car loan. However, this doesn't mean the car you're buying has to be that expensive – just that the loan amount has to reach the threshold. Be careful, though, as less expensive vehicles may end up costing you more than you bargained for.

The Minimum Cost of Financing

If you're set on financing a car that costs less than the minimum auto loan amount, you're likely to find that you're able to do this as long as the total cost of financing reaches the $5,000 minimum.

This is because the loan amount differs from vehicle selling price. For example, you could finance a $4,000 car, but still end up borrowing $5,000 after dealer add-ons, taxes, and fees are rolled into the loan.

Minimum auto financing amounts are just one of the things you need to be aware of when you're searching for a low-cost vehicle to buy. Typically, people looking at the cars with the lowest price need to be careful because lenders also have vehicle guidelines concerning age and mileage.

Subprime lenders usually won't finance cars that exceed 10 years old and/or 100,000 miles. Even though there are guidelines that most stick to, each lender is different and has their own set of rules, so be sure to ask about the specific restrictions ahead of time.

Why Is There a Minimum Financing Amount?

Is There a Minimum Amount for Auto Financing?When you have bad credit, you're most likely going to finance through a subprime lender or a buy here pay here dealership. These lenders are able to help people with damaged credit when others can't.

As a bad credit borrower, minimum loan amounts may seem unfair if you're not looking to finance an expensive vehicle, but in reality, these guidelines are in place to protect you.

Less expensive cars are often more prone to breakdown. When you're struggling financially, expensive service and repairs can be hard to swallow. In some cases, the repairs on low-priced vehicles exceed the car's value, which can put you in a bad place. No one wants to sink more into a vehicle than it's worth.

Also, when you take out a less expensive loan for an older, higher-mileage car, your interest rate is going to increase. It can cost more to finance less. Keep in mind that as a bad credit borrower, you're already going to pay more in interest charges than a borrower with better credit.

Financing Your Next Car

If you're only looking for a less expensive vehicle to finance because you think your credit is standing in your way, you may be surprised at what you might qualify for with the right lender.

When you have bad credit, you don’t want to finance something outside your means, but a reliable, affordable car could still be in the cards if you're going through a subprime lender.

These lenders look at other factors along with your credit score to approve you for an auto loan. If you aren't sure where to start looking for one, Auto Credit Express want to help.

We work with a nationwide network of special finance dealers that are signed up with subprime lenders. To find one in your area, fill out our secure car loan request form. What are you waiting for? Get started today!