Having a good credit score, a high paying job and no debt could still mean a rejection for a $5,000 auto loan. Not because you lack the credit requirements, but it might be too low of an amount for some lenders to bother handling. Fortunately, if you qualify for an auto loan, but do not need more than a few thousand dollars, you can go for a personal loan or other lines of credit.
As of the date of publication, most lenders require borrowers to take out at least $5,000 for an auto loan. Anything below this amount may not be profitable enough or too much trouble for the bank. However, the minimum loan amount requirement varies from lender to lender, so you may have to search around to find a bank willing to issue a $5,000 auto loan.
If you are looking to refinance an older car loan, most lenders won't bother with anything less than $7,500, according to CreditProvider.com. Like with an original auto loan, there is a breaking point where it is too expensive and risky to maintain such a small account even when you are creditworthy.
When creditors reject your application due to not meeting the minimum loan amount, you could go with a personal loan. You can use personal loans for just about any expense, such as remodeling a home or buying a car. Lenders usually charge more in interest for an unsecured personal loan because they can only go after the borrower in court in case of default. A secured personal loan, which requires you to put collateral, garners a lower interest rate.
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Shop around for the lowest possible rate on whatever loan you choose. At $5,000, a home equity line of credit or loan -- a loan secured by your home -- tends to have an extremely low interest rate because of the security. Credit cards are an option if the dealer agrees to put the entire purchase on credit -- many dealers refuse credit cards because of the processing fees. You are also likely to earn cash back on the purchase if your credit card provider offers a cash rewards program. Also, the dealer might offer in-house financing, but expect higher rates than a loan from a bank because some dealers do not perform a credit check.