Man Comes In With 400 Credit Score. Then The Salesman Shows What Kind Of Car He Can Actually Get: 'Only Way To Get Approved...'

Buying a car can be a challenging process that involves endless hours of research, test drives, and negotiations. While picking a car is already hard enough, more obstacles get added when the potential buyer has a low credit score. While it’s not impossible, there are just more barriers added to sign on the dotted line to complete the sale. 

A Toyota salesman reveals what the process entails if a potential buyer has a credit score of 400. In a TikTok with over 1,300 views as of this writing, Josh Welty (@jawsellscars) shares what needs to be done to get approved with a 400 credit score. 

“The only way to get approved is to have 10% to 20% down on the vehicle's worth,” Welty begins.

Whatever the listing price is, take 20% to determine the down payment amount. He mentions a $10,000 car will need a $2,000 down payment at signing. 

“You gotta have some sort of commitment because you weren’t really committed to anything in the past because you have a low credit score,” he shares.

A customer with a low credit score isn’t ideal for banks. With a 10% to 20% down payment, the banks have a little more confidence in financing the potential buyer.

“Banks wanna see that [down payment] so that they don’t get burned. You putting down 20% shows that, 'Hey, I’m a little bit committed,’ you know? ‘I might make my payments and might not get a repo,’’” he elaborates. 

Banks will only take calculated risks when financing someone with a low credit score. So when a buyer puts up a 20% down payment, banks can feel more confident about offering financing. Welty does mention it’s essential to build back the credit and to buy a dependable car when someone has low credit. 

“You gotta build your credit back up. Don’t go to a cash car; that’s just not gonna help. So get something that’s reliable. Come to me and get a Toyota, and I can hook you up,” he concludes. 

What Kind Of Car Can You Get With A 400 Credit Score?

Getting a car with a low credit score can certainly create more barriers and obstacles when buying a car. Generally speaking, financing options with a favorable interest rate and low monthly payment are reserved for people with high credit, GM Financial reports.

So having a lower credit score will entail having a higher monthly payment and interest rate. While there is no minimum credit score required to buy a car, there is more hesitation with banks when financing with low credit. So, it is possible to buy a car with no credit; there is just more at play during the buying process. 

Motor1 previously reported that the Toyota Corolla, Volkswagen Jetta, Dodge Caravan, Chevy Trax, Honda Pilot, Mitsubishi Outlander, and Ford Flex are great car models for people with bad credit. Additionally, the salesman suggested looking into Mazdas and Buicks as well. 

Welty agrees with buying a dependable vehicle as opposed to a luxury one. 

Welty told Motor1, “If you are buying used it also helps if you go for reliable vehicles like Toyota for example as opposed to luxury vehicles like Mercedes. The bank is more likely to approve a loan for a Toyota Corolla that has 100k miles instead of a Mercedes GL250 with 100k miles. Reason being Toyotas are known for lasting 200-250k at least. So if the car lasts then the bank will get their money paid back as opposed to it breaking down like a luxury vehicle with high miles would.”

How To Land Financing With A Low Credit Score

By not having a high credit score, banks will be wary of financing for a newer car. Buying a car with a 400 credit score will typically mean getting an older, cheaper used model. As mentioned, the sale will need a down payment anywhere from 10% to 20% to increase chances of being approved for financing. 

According to Experian, it’s best to max out the down payment as much as possible to create a more favorable loan. To increase chances of getting financing approved, car buyers should also get someone to co-sign on the lease. 

Welty elaborates to Motor1 on the benefit of having a strong co-signer. 

“Having a strong co-signer is great too as that brings APR down which helps you save money over the term of your loan,” he says. “The 20% is what banks like to see for a good approval for people with 400 credits but sometimes depending on the situation of an individual you can get away with a minimum of 10% down of the vehicle's worth.” 

Financing options will vary, so it’s best to shop around for financing options outside of just the dealership. Getting a car loan can be a way to increase your credit score if payments are made each month. 

Additionally, Welty told Motor1 another way to boost a credit score is by downloading the Experian app.

He explained, “A big thing I’ve seen to help people out is using the Experian app and there’s a section that says ‘boost credit.’ I've seen people's credit jump about 10-15 points just from that. What it does is it takes monthly charges that are reoccurring like a Netflix bill, Spotify bill, or some sort of subscription and counts it towards your credit positively. Every point counts when it comes to approval.” 

While driving an older, cheap used car may not be the most fun thing to do, it’s essential to rebuild credit. 

‘What About No Credit?’

One of the viewers in the comments section asked Welty about buying a car with no credit history. 

“What about no credit?” one TikTok commenter asked.

“Even with no credit you appear as what’s called a ‘ghost’ or ‘baby credit.’ Typically these people need co-signers or also that 10-20% down to give the banks some confidence that you are serious and won’t leave them high and dry. No credit is rare, but I’ve seen it a few times. They are in the same boat as first time buyers. Not impossible to get a car with no credit though,” Welty replied. 

While other viewers were hyped to see Welty making car financing content. 

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“BIG J,” one commented. 

“BEST CAR SALESMAN!” another added.

 

 

 

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