- Below-average credit scores accepted
- Great interest rates
- Smooth and easy online experience
- Great for customers with limited/no credit
- Offers special military rates
- A+ BBB rating
- Get approved in as little as 60 seconds
- All credit types gladly accepted
- Absolutely no obligation
- Specializes in auto refinancing
- A+ BBB Rating
- No application fee
- Below-average credit scores accepted
- Great interest rates
- Smooth and easy online experience
- Great for customers with limited/no credit
- Offers special military rates
- A+ BBB rating
All APR figures last updated on 3/2/2023 - please check partner site for latest details. Rate may vary based on credit score, credit history and loan term.
It’s not always easy to find auto loans for bad credit borrowers. But while it may be hard to secure an auto loan with poor credit, it’s not always impossible. Many auto lenders specialize in providing loans for people with lower credit scores.
Our team compared dozens of lenders inside and out to help borrowers feel confident comparing auto loans and making good financial decisions. We scored lenders in the following categories: industry standing, availability, loan details, rates, and customer service. The data we gathered includes starting interest rates, fees, discounts, loan types, customer review scores, and availability of prequalification and preapprovals.
In this review, we’ll list several auto loan providers that offer loans for drivers with bad credit scores, no credit, and bankruptcies. We’ll also provide tips on how to apply for a loan when you have bad credit and how to improve your credit score. While the best auto loan rates aren’t available to those with poor credit, a low credit score doesn’t necessarily mean a car loan with a reasonable annual percentage rate (APR) is impossible to find.
Our Methodology: How We Rate Auto Loan Providers
Each year, our team reviews hundreds of data points for dozens of lenders to rank the best. In this article, we’ll highlight the best lenders that work with bad-credit borrowers. These lenders all scored well in the following categories.
Industry Standing
First and foremost, you need to know a company is legitimate and has a track record of doing good business. In this category, we include a company’s Better Business Bureau (BBB) rating and accreditation along with its longevity in the industry.
Availability
Lenders have different requirements that make them unavailable to some borrowers. We evaluate a lender’s age restrictions, minimum credit score, availability by state, preapproval availability, vehicle restrictions, and more.
Loan Details
Next, we look at the types of loans a lender offers and the options within the loan contracts. Some lenders only offer refinancing, while others offer many types of loans. Loan options include payment terms, minimum and maximum loan amounts, and add-ons like gap insurance or vehicle protection plans.
Rates And Discounts
Rates and discounts make up how much you actually pay to borrow the money. Some lenders offer lower starting APRs than competitors. This category rating includes:
- Starting APR
- Application fees
- Prepayment penalties
- Missed payment forgiveness
- Discounts for autopay, bundling services, using a car buying service, and more
Customer Service
Customer service can make or break your experience with a lender. We include customer ratings from sites like the BBB and Trustpilot in this score along with a company’s accessibility. We note if it offers an online chat feature or 24-hour phone support. Our rating includes whether a company offers a loan calculator or a mobile app, as well.
What To Know Before Getting A Loan With Bad Credit
Here are a few things to know before you get a bad credit auto loan.
Types Of Car Loans
Generally speaking, the main types of loans include new and used purchase loans, refinance loans, lease buyouts, and private party loans. All of these loans are secured by using the car as collateral. That means if you default, the lender can repossess your car.
New And Used Purchase Auto Loans
If you’re looking for a bad credit auto loan, you’re probably looking to purchase a new or used vehicle. Most lenders on our list offer purchase loans. Some are direct lenders like banks while others work with networks of lenders.
Refinance Auto Loans
When you refinance, you take out a new loan to pay off your existing debt. Whether interest rates have gone down since you took out your original loan or you have improved your financial situation to get a lower APR, this can save you money over the remaining loan balance. Or, you can use a refinance loan to get a longer payment period and lower your monthly payment (though that may result in you owing more than your car is worth later on).
Lease Buyouts
You may be looking to purchase your leased car. If your credit score went down during the lease, this may be a bit tricky. However, some lenders work with bad credit borrowers for lease buyouts, so it’s worth shopping around.
Private Party Loans
Private party loans let you purchase a car from an owner directly, whether you find them through word of mouth, Craigslist, or Facebook Marketplace. Unfortunately, these are a bit harder to come by if you have bad credit.
Lender Requirements
Lenders can require your car to meet mileage and age restrictions before lending you money. You also might not qualify depending on your credit score or history. Lenders that work with bad-credit borrowers often put more weight on other factors like your monthly income and employment stability.
Bad Credit Auto Loan Fees
Many loans come with one fee or another, but you’re more likely to encounter fees if you work with bad-credit lenders. Unfortunately, the rate of default is higher among borrowers with poor credit, so lenders may try to secure more profit with fees like origination fees or prepayment penalties. You may also have to pay dealership fees in some cases.
- Origination fee: This is a fee for creating and funding the loan. It can be a flat fee or a percentage of the balance.
- Dealership fees: Dealerships can charge fees for documentation, DMV paperwork, preparation, VIN etching, and more. Dealers can add on products like extended warranties and roll them into your loan as well, so be careful when you are negotiating the price.
- Prepayment penalty: This fee is imposed if you pay the loan off early. Toward the end of the loan, you may pay more overall if this fee is significant.
Auto Loan Prequalification Vs. Preapproval
When shopping around for bad credit auto loans, it’s helpful to get multiple prequalifications and even preapprovals before going to a dealer. But these are not the same thing.
Prequalification tells you whether you’re likely to be approved for the loan and it may show an estimated APR, as well. This does not affect your credit score. However, this doesn’t mean you are fully approved.
Preapproval is a full approval for a specific loan amount and APR, and it affects your credit score. The advantage of a preapproval is you can know exactly what you’re approved for before entering a dealership. You can use this to negotiate a better price on a vehicle or even a better APR from the dealer if you want to use its financing.
How To Apply For Auto Loans With Bad Credit
Applying for an auto loan with bad credit isn’t much different from any other credit situation. The main differences are that you’ll typically have fewer options and higher rates. There are just a few steps to the application process.
Prepare The Documents Needed To Apply For A Car Loan
When you apply for a bad credit auto loan, you will likely need to supply potential lenders with some information about you and the vehicle you wish to purchase. This includes:
- Personal details like your name, address, age, and Social Security number
- Contact information such as your email address and phone number
- Gross annual income information
- Vehicle information like model, age, mileage, and vehicle identification number (VIN)
Before you finalize your auto loan, you may also be required to supply copies of the following documents:
- Driver’s license
- Recent pay stubs
- Personal references
Our Customer Survey
We surveyed 2,000 auto loan customers on their experiences with the process.
Most Common APR
In our survey, we found the majority of respondents (54 percent) had APRs of 7 percent or below. The rest had higher APRs with the maximum being 26 percent.
We also found 24 percent of respondents had APRs that ranged from 15 to 26 percent. This segment correlates roughly to the average APRs for borrowers with below-average and poor credit scores.
What People Are Looking For
When considering all respondents, we found most people were looking for the best APR followed by the right loan terms when considering auto loan options. However, looking only at people with high APRs, we found most of those respondents were looking for the right loan terms first. This may be because fewer lenders are available to people with poor credit.
How People Shop For Auto Loans
You can shop for auto loans in many ways. Most respondents on our survey said they got dealership loans in person, while the second most popular answer was using an online lender. Most people also look for prequalificaitons and preapprovals before fully committing to a loan.
Customer Satisfaction
Overall, most people were satisfied with their auto loan experience. The 2,000 respondents rated their satisfaction an average score of 7.7 out of 10.0. However, when looking at respondents who had high APRs, they rated their experience 7.3 out of 10.0 overall. Perhaps lenders that cater to bad-credit borrowers offer a slightly worse experience. Or, knowing the loan was more expensive could have soured their experience, as well.
18 Auto Loans For Bad Credit
The list below names 18 reputable bad credit car loan providers that offer loans to drivers with bankruptcies and/or poor FICO credit scores. Several of the companies listed below even specialize in bad credit auto financing. Which lender will offer you the best rates depends on your specific circumstances, but this list is a good place to begin your search.
Best Auto Loans For Bad Credit Providers
| Auto Loan Provider | Minimum Credit Score Required | Minimum Annual Income Required |
|---|---|---|
| Auto Credit Express | 300 | $18,000 |
| myAutoloan | 575 | $21,600 |
| Capital One | No minimum credit | $18,000 |
| AutoPay | 575 | Not Specified |
| Auto Approve | 600 | $18,000 |
| Clearlane | 580 | $24,000 |
| Tresl | 580 | $18,000 |
| RateGenius | 640 | $24,000 |
| Prestige Financial | No minimum credit | $27,000 |
| RoadLoans | No minimum credit | $21,600 |
| Vroom | No minimum credit | $18,000 |
| Carvana | No minimum credit | $10,000 |
| New Roads | No minimum credit | Not specified |
| Credit Acceptance Corp | No minimum credit | Not specified |
| Drivetime | No minimum credit | Not specified |
| Carmax | No minimum credit | Not specified |
| CarZing | No minimum credit | Not specified |
| Byrider | No minimum credit | Not specified |
Best Subprime Auto Lenders
Below are our picks for the best subprime auto lenders. Getting an auto loan for bad credit is difficult, but these providers have shown a great track record with customers who have bad credit. We’ll go into more detail about their history, their car financing options, and highlights related to their services.
#1 Auto Credit Express
Company type: Online loan aggregator
Lowest APR: Varies by lender
Minimum credit score: 300
Offers prequalification: No
Loan Types
- New purchase loans
- Used purchase loans
- Leasing
Why We Picked It
Auto Credit Express can help subprime buyers find loans that have low down payment requirements, which makes it a bit easier to get approval for a used or new car loan. Lenders in their network can also work with people who have had a bankruptcy.
Auto Credit Express works with a network of subprime lenders that lend through dealerships, not directly online. After you apply, you’ll hear from a few different dealerships in your area that work with bad-credit borrowers. At that point, you’ll see what you qualify for and can choose a vehicle from one of these dealers. Auto Credit Express can also help you get a leased vehicle.
The only downside to Auto Credit Express is that it doesn’t offer prequalifications. In other words, an application will affect your credit score and one or more dealerships may pull your credit after you apply. So, be sure you’re ready to shop around from lenders before completing an application with Auto Credit Express.
Auto Credit Express Pros And Cons
#2: MyAutoloan
Company type: Online loan aggregator
Lowest APR: 2.49%
Minimum credit score: 575
Offers prequalification: Yes
Offers preapproval: Yes
Loan Types
- New purchase loans
- Used purchase loans
- Refinance loans
- Private party loans
- Lease buyouts
Why We Picked It
While myAutoloan requires a credit score of 575, it’s a great option for borrowers with below-average credit. The company is our top pick for auto loans overall because it offers a variety of loan types and low starting APRs.
MyAutoloan works with a wide variety of lenders nationwide, including banks, credit unions, and dealerships. The nice thing about myAutoloan is you can see whether you’re qualified without hurting your credit. And if you are qualified, you can compare loan offers from up to four lenders with one application.
MyAutoloan Pros And Cons
#3 Capital One
Company type: Bank
Lowest APR: Not stated
Minimum credit score: No minimum
Offers prequalification: Yes
Offers preapproval: No
Loan Types
- New purchase loans
- Used purchase loans
- Refinancing
Why We Picked It
If you want a large bank experience, we recommend checking out Capital One. Capital One offers prequalification for both purchase loans and refinancing loans.
Capital One doesn’t have a credit score requirement for loan approval. However, it requires you to make at least $1,500 or $1,800 per month depending on your credit. If you are prequalified, you can get a loan at one of Capital One’s 12,000 participating dealerships through its car buying service called Navigator. With this service, you can see vehicles for sale in your area. You’ll then finalize financing in person at the dealership.
Capital One Pros And Cons
Learn more in our Capital One review.
#4: AutoPay
Company type: Online loan aggregator
Lowest APR: 2.99%
Minimum credit score: 575
Offers prequalification: Yes
Offers preapproval: No
Loan Types
- New purchase loans
- Used purchase loans
- Refinance loans
- Cash-out refinancing
- Private-party auto loans
- Lease buyouts
Why We Picked It
AutoPay offers many types of loans to a wide variety of borrowers. The site has a modern feel and is easy to navigate. AutoPay works with several lenders, so even though some require a credit score of 575, it’s still worth reaching out for a prequalification if your score is below that.
AutoPay has a high customer rating of 4.5 stars on the BBB, which is unusual for the auto loan industry. But because it works with different lenders, the loan terms can vary. You may also come across loans that have prepayment penalties depending on the lender you work with.
AutoPay Pros And Cons
Where To Get Auto Loans For Bad Credit
You can find auto loans for bad credit from a variety of legitimate lenders on the market today. Some of these lenders have minimum credit score requirements, while others do not. However, you will need to show some form of regular income. Most bad credit auto loans require you to make at least $18,000 per year.
People with bad credit may have a harder time finding auto loans than people with good credit, but there are still plenty of options. Here are the main types of lenders for bad credit auto loans:
- Traditional banks: Some banks offer auto financing to people with lower credit scores. If you have a bank you already like working with, you may want to check their loan requirements first.
- Credit unions: Your local credit union and even some national ones may be more willing to work with bad credit borrowers than commercial banks. Credit unions typically have low rates and fewer fees compared to other lenders. However, they do also usually require membership.
- Online lenders: Online-only lenders have jumped in popularity in recent years, allowing you to go through the loan process from your phone or computer. Some of these lenders specialize in bad credit auto loans.
- Brand dealerships: Car dealers for larger auto brands may be able to find financing options for poor credit borrowers on new and used cars.
- Buy here pay here (BHPH) dealerships: Independent dealerships that offer their own financing options may be able to help borrowers with poor credit get approved for a used car loan. Loans from these dealers, however, typically come with very high interest rates.
Be prepared to face higher interest rates if you have poor credit. However, you can reduce the amount of interest you will pay on a bad credit auto loan if you make a bigger down payment or choose a shorter loan payoff period.
Bad Credit Auto Loan Interest Rates
Having a low credit score will make the loan more expensive in the long run. How much more depends on the interest rate. According to Experian’s State of the Automotive Finance Market report, the average interest rate for borrowers with very poor credit was 14.76 percent for new cars and 20.99 percent for used cars in 2022. These borrowers have credit scores between 300 and 500.
Average Auto Loan Rates By Credit Score
The graphic below shows the average auto loan rates by credit score for new and used car purchases, according to the 2022 Q4 Experian State of the Auto Finance Market report.
Bad Credit Auto Loan Rate And Payment Comparison
If you borrow $15,000 and pay an interest rate of 14.76 percent on a 60-month bad credit car loan, you’d end up paying $21,298 in total. That means you paid $6,298 in interest, which is over a third of the value of the loan.
- Borrow: $15,000
- Interest rate: 14.76%
- Total paid over 60 months: $21,298
If you were able to improve your score above 500, you might find rates around 10.87 percent. Those few points make a big difference, and you’d pay almost $2,000 less when all is said and done.
- Borrow: $15,000
- Interest rate: 10.87%
- Total paid over 60 months: $19,510
As you can see, your credit score is a major factor in the rates you get on auto financing and other loans. People with good credit scores can typically find loans with nearly any financial institution at reasonable rates, but people with a credit score under 600 may have more difficulty.
How To Get Cheaper Auto Loan Rates With Bad Credit
Your credit score is the most important factor in the auto loan rates you get. And while it takes time to improve your credit score, there are some things you can do to try and get a lower rate with the score you have now.
Consider Buying A New Car Instead Of A Used Car
As you can see from the table above, auto loan interest rates increase steeply for borrowers with credit scores of 660 and below. You will also notice that interest rates for new car purchases tend to be lower than those for used car purchases. However, if money is tight, you may still save more by purchasing a used car, though you will pay a higher interest rate.
Put More Money Down
The loan-to-value (LTV) ratio on your auto loan compares the amount of money you borrow to the value of the vehicle you purchase. Increasing your down payment or adding cash to your trade-in value decreases your LTV ratio. A lower LTV ratio can sometimes get you a lower interest rate.
Get A Shorter Loan Term
A shorter loan term will result in higher monthly payments, but it may also get you a lower interest rate and reduce the overall loan cost. The more quickly you pay off your auto loan, the less interest you will ultimately accumulate. However, some lenders charge a prepayment penalty, so make sure you understand the fine print of your auto loan before paying it off early.
Get A Co-signer
The easiest way to get a lower interest rate if you have a poor credit score is to add a co-signer with good credit to your loan. A co-signer is someone who accepts responsibility for the loan with the signer and will be on the hook with collections if you miss any payments.
Tips For Bad Credit Auto Loans
Some lenders do offer auto loans for bad credit. While they typically come with higher interest rates and other downsides, some are better than others. Knowing what to look for and where to look can help you avoid additional financial hardship.
Compare Lenders That Offer Bad Credit Auto Loans
Applying for auto financing used to take place primarily in banks or at car dealerships. Today, most companies have online applications, making it easy to request and compare several auto loans at a time.
You can also use a service like AutoCreditExpress.com, which lets you see personalized loan offers from multiple lenders at once. However, it’s still a good idea to apply for an auto loan at your local bank or credit union in addition to searching online.
Avoid A Hard Credit Check Until You Need One
Look for companies that offer a preapproval process that does not require a hard credit check. What this means is that you will self-report your FICO score and income information to the lender. You will then be made a provisional auto loan offer. This is not an official offer, and your terms may not be finalized until after a hard credit check.
Do not submit to a hard credit check unless you are fairly confident you will accept the loan offer. You want to limit any negative impact to your credit score while you are still considering your options.
If you’re just shopping around, you can use one of the many car loan calculators available online to get a general idea of your budget without handing over your personal information.
Know The Difference Between Interest Rates And APR
You may see online lenders and others use the terms “interest rate” and “APR” in similar ways. But it’s important to understand the difference.
Interest rate refers to only the rate of interest that a lender charges on a loan. APR, on the other hand, includes taxes, fees, and other costs that are rolled into your loan in addition to the interest rate. Make sure you are comparing the same figures when you compare loan offers from multiple lenders.
As an example, let’s say you took out a $10,000 loan with a 6 percent interest rate. This loan also had a $300 origination fee. Now, the origination fee is added to the $10,000 loan amount and spread across the life of the loan. Because of this, the APR is slightly higher than the interest rate of 6 percent.
Work To Improve Your Credit Score
A good credit score is vital to saving money and has benefits beyond a low interest rate on your auto loan. In several states, your credit history may also be used to determine your auto insurance premium. If you have bad credit, you should work to improve it as soon as possible. However, raising your credit score cannot be accomplished overnight.
Some ways to improve your credit score include:
- Open a credit card: Don’t let your credit balance get too high, and pay off your bill in full each month. This shows lenders that you are dependable and can be trusted to make your loan payments.
- Increase your credit limits: The amount of credit you’re using affects your score. For example, if you had a credit card with a limit of $1,000 and had a balance of $500, you’d be using 50 percent of your credit. However, if you asked your bank to increase your limit to $2,000, you’d only be using 25 percent of your credit. This can raise your score.
- Consolidate debt: Try to consolidate your debts into one place with the lowest interest rates possible.
- Diversify your credit: Your credit mix is an important component of your score, and having just one type of credit, such as credit cards, can bring it down. Taking on a personal loan can diversify your credit and may improve your score.
- Pay down existing debt: This will save you money in the long run and help your credit score.
- Wait: Certain negative factors will fall off your report after a number of years. Late payments, collections, and bankruptcies are removed from your report after seven years.
- Monitor your credit: Many of the major credit bureaus, such as Experian, Transunion, and Equifax, offer credit monitoring and tools for improving your credit. Take advantage of these programs.
- Check your report: Request a copy of your credit report and look for errors or outstanding debts you may have forgotten about.
If you initially take out a bad credit auto loan but later improve your credit score, be sure to consider auto loan refinancing. This involves taking a new loan with better interest rates to pay off the existing loan. You may want to refinance your auto loan after your credit score increases above 660.
Bad Credit Auto Loans: Conclusion
At the end of the day, there are a variety of lenders that work with car buyers who have bad credit. That’s why it’s a good idea to work with a comparison service or get multiple prequalification offers to see what’s available to you.
- Below-average credit scores accepted
- Great interest rates
- Smooth and easy online experience
- Great for customers with limited/no credit
- Offers special military rates
- A+ BBB rating
- Get approved in as little as 60 seconds
- All credit types gladly accepted
- Absolutely no obligation
- Specializes in auto refinancing
- A+ BBB Rating
- No application fee
- Below-average credit scores accepted
- Great interest rates
- Smooth and easy online experience
- Great for customers with limited/no credit
- Offers special military rates
- A+ BBB rating
All APR figures last updated on 3/2/2023 - please check partner site for latest details. Rate may vary based on credit score, credit history and loan term.
Auto Loans With Bad Credit: FAQ
Below are some frequently asked questions about auto loans with bad credit.
Disclaimer: Our research team aims to keep this information accurate and up to date, but you’ll get the most recent information from financial institutions. Rates and terms vary according to applicant and market conditions. We do not offer warranties for any loan products or services discussed on the site, and we recommend you read through a financial institution’s terms and conditions carefully when making a decision on a loan product.
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