Now that used car prices aren't getting hit by the pain of the supply chain's ripple effect, prices are coming down. Couple that with the near $50k average new car price, and it points you in the direction of getting a good used car for your next vehicle. What's more, an affordable used car can make hte auto loan approval processeasier, lower down paytments, and help you improve your credit.

When your credit falls in the subprime range, it can be overwhelming. But you have to face reality and deal with things head on, or matters just get worse. A poor credit score comes from large debt, bankruptcy, repossession, or insufficient credit history, and can make financing a used car difficult. Luckily, you can improve your shot at auto loan approval by understanding your credit and what lenders look for.

#1 Review Your Credit Report

First and foremost, you'll need to review a copy of your credit report and look it over to make sure it's correct. You'd be surprised that there could very well be errors, but it happens. You can get a free credit report every year from all three credit bureaus including Equifax, Experian, and TransUnion. You can also sign up for free reports on If you find an error, dispute it on the website with proper documentation and records.

Lenders take a keen look at your credit score, credit utilization, and debt-to-income ratio. Credit utilization represents how much available credit you have used. The ideal is to keep your utilization under 30 percent. It helps to pay down large credit card balance in order to keep your credit utilization low. Don't just make the lowest payment possible. Also, ensure you make timely payments and eliminate overdue accounts to help boost your score.

#2 Understand Your Financing Options

Car shoppers usually choose to finance their vehicles at the dealership's F&I (Finance & Insurance) office or get a loan through their local bank. Keep in mind that there are other optinosn, and not all lenders are created equal. If you go with a large bank or try to get a dealer loan, they make it harder to approve car shoppers with seriously compromised credit.

Credit unions are a great option. Credit unions are non-profit entities that are typically owned by the members. As a general rule, they provide greater flexibility for borrowers with bad credit to secure a loan. Credit unions oftentimes have lower interest rates on auto loans than banks, so getting a lower APR rate than a big bank isn't unheard of.

Then there are online auto lenders that provide services for car shoppers with compromised credit. Whereas most lenders have physical offices where you can meet with a loan officer face-to-face, online lenders are strictly via the web. On the bright side, you can do everything electronically and can cross-shop with multiple lenders without stepping foot outside your home.

#3 Do Your Research

Definitely do not buy the first good used car you find. It might be the one you end up with, but it's important to look at more than a handful. Check online ads from dealers and private individuals. Places like CarMax tend to have high markups, and dealers can, as well. Look for market values based on trim level, features, condition, and mileage. If prices out there seem way higher, look at other models where the delta isn't as significant.

Don't buy a car without a clean title because you have no real idea of what happened to it. Aks the seller to provide you with a CarFax report or pay for one yourself so you know as much as you can about the car's history. Ask for maintenance paperwork, as well. This way, you can know what happened to the car. Look online and cross-shop. Go see and drive every car you're serious about. Once you've narrowed down your choices, prepare to negotiate. Also, ask the seller if you can have the car inspected by a mechanic so you can find out the condition of the car that you can't see from just looking at it. If everything checks out, have the money ready. Cash in hand also provides you with some leverage.