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Currently, the best car loans for bad credit are offered by these subprime auto lenders: myAutoLoan, Capital One, and Auto Credit Express.
Crash Course:
- Subprime or bad credit auto loans are vehicle financing options for those with no credit, limited credit histories, and low credit scores
- Expect to pay a steep interest rate if you’re in the market for a bad credit car loan.
- Compare quotes from various auto lenders to find offers with reasonable interest rates.
Compare Bad Credit Car Loans
Compare which options fit your budget, credit score, and term length below.
- All
- 36 to 72 months
- 24 to 84 months
- All
- 500
- 510
- 575
Used Car Loan
Cred Score
Rate Term
APR*
- Great for customers with limited/no credit
- Offers special military rates
- A+ BBB rating
Used Car Loan
Cred Score
Rate Term
APR*
- Below-average credit scores accepted
- Great interest rates
- Smooth and easy online experience
Refinance Loan
Cred Score
Rate Term
APR*
- No application fee
- Lending platform that partners with banks
- Approval and loan terms based on many variables, including education and employment
Bad credit car loans come with extremely high interest rates but may be the only auto financing option for some drivers. Still, some lenders are far better than others.
To help you find the best auto loan rates and lenders, our team researched the country’s top providers to see how they serve those with low credit scores. In the following article, you’ll find details about the best bad credit auto financing providers along with a guide to finding the lowest loan rates for your credit score.
Here are some things to keep in mind as you search for bad credit car loans:
- There’s no minimum credit score to get an auto loan.
- Most lenders require a minimum income.
- Ratings and reviews on sites like the Better Business Bureau (BBB) can help you to identify reputable lenders.
- Find better rates by comparing your options and working to raise your credit score.
Best Car Loans For Bad Credit Lenders
Not all car lenders work with borrowers who have bad credit. Our team identified and evaluated providers that have a high likelihood of loan approval for those with poor credit scores. Below are a few lenders that offer strong rates and services to even risky borrowers:
| Subprime Auto Lenders | Minimum Credit Score Required | Loan Amounts | Minimum Annual Income |
|---|---|---|---|
| myAutoloan | 575 | $8,000 to $99,000 | $21,000 |
| Capital One | No minimum | $4,000 to $75,000 | $18,000 |
| Auto Credit Express | No minimum | $5,000 to $45,000 | $18,000 |
| Clearlane | 580 | $10,000 to $80,000 | $21,600 |
| Carvana | No minimum | $1,000 to $85,000 | $10,000 |
| Vroom | No minimum | $5,000 to $100,000 | $21,600 |
| Credit Acceptance Corp. | No minimum | Determined by dealer | Not specified |
#1 myAutoloan: Best Loan Marketplace
Minimum credit score: 575
Minimum annual income: $21,000
BBB rating: A+
Rather than a direct lender or broker, myAutoloan is a car financing marketplace. This means that multiple lenders send competing offers after you submit your information to the site. The marketplace model makes it easy for car owners to compare various offers and potentially find more competitive rates.
myAutoloan Pros and Cons
| myAutoloan Pros | myAutoloan Cons |
|---|---|
| Website features useful tools like an interest rate estimator and payment calculator | Has a minimum credit score requirement |
| High rating from customers on Trustpilot | Not available in Alaska or Hawaii |
| Allows borrowers to compare multiple offers in one place |
Keep reading: myAutoloan review
#2 Capital One Auto Finance: Best Bank for Bad Credit
Minimum credit score: None
Minimum annual income: $18,000 or $21,600 depending on credit score
BBB rating: A-
Many banks don’t offer auto financing to borrowers with bad credit, but Capital One is an exception. While the company doesn’t require a minimum credit score, it adjusts the minimum income requirement based on your credit. Capital One offers prequalification, allowing you to get estimates without damaging your credit rating. Borrowers can use Capital One’s Auto Navigator tool to find their new vehicle at one of the company’s over 12,000 participating car dealers.
Capital One Auto Finance Pros and Cons
| Capital One Auto Loan Pros | Capital One Auto Loan Cons |
|---|---|
| Soft pull prequalifications | Must buy car from a participating dealership |
| No minimum credit score | No lease buyout option |
| No prepayment penalty | Many BBB complaints |
Keep reading: Capital One auto finance review
#3 Auto Credit Express: Best for Bad Credit
Minimum credit score: None
Minimum annual income: $18,000
BBB rating: A+
Auto Credit Express is an online lending broker that specializes in car loans for people with bad credit. The company has helped millions of customers since its founding in 1999. There are no credit score requirements for securing a loan through Auto Credit Express, and loan amounts can range from $5,000 to $45,000. It’s also one of very few lenders that will work with borrowers during and after bankruptcy.
Auto Credit Express Pros and Cons
| Auto Credit Express Pros | Auto Credit Express Cons |
|---|---|
| Lots of helpful resources on its website | Not a direct lender |
| Auto loan options for people who have filed for bankruptcy | Mixed customer reviews |
| Low minimum income requirement | Some lending partners are “buy-here-pay-here” dealers |
Keep reading: Auto Credit Express review
How To Get a Car Loan With Bad Credit
The process for getting bad credit car loans isn’t much different than the one for those with good credit. Most steps are the same, though you’ll likely have fewer lending options and could face higher interest rates.
What’s the Average Interest Rate for Bad Credit Car Loans?
The average annual percentage rates (APRs) for bad credit auto loans range from 11% to 14% for new cars and 18% to 21% for used vehicles. Average rates for bad credit car loans are quite high and are primarily influenced by your poor credit score.
Car Loan Rates With Bad Credit
Usually, those with bad credit face the highest car loan rates since they’re typically seen as risky borrowers. Below are the average rates for new and used car loans by credit score according to the Experian State of the Automotive Finance Market Q4 2022 report:
| Credit Band | Credit Score | Average Rates for New Car Loans | Average Rates for Used Car Loans |
|---|---|---|---|
| Superprime | 781 to 850 | 5.18% | 6.79% |
| Prime | 661 to 780 | 6.40% | 8.75% |
| Near prime | 601 to 660 | 8.86% | 13.28% |
| Subprime | 501 to 600 | 11.53% | 18.55% |
| Deep subprime | 300 to 500 | 14.08% | 21.32% |
In the chart, you’ll note that there are five credit bands: superprime, prime, near prime, subprime, and deep subprime. Those with bad credit fall into the subprime and deep subprime credit categories. Moving from one tier to the next increases car loan APRs as rates jump significantly from near prime to subprime.
How Does a Bad Credit Score Affect Car Loan Rates?
When you borrow money to buy a car, the lender basically purchases the car for you. Then, it charges you interest for using its money while you pay back the purchase price. To the lender, a low credit score means the borrower is less likely to make on-time payments. Auto lenders charge more in interest to offset this risk.
You’ll pay thousands more in interest if you’re applying for a bad credit car loan versus for a loan if you’ve got a superprime score. Improving your credit score by 100 points could save you over $1,000 in interest payments.
Keep in mind that your credit score isn’t the only thing that changes your loan payment. If you choose to get an extended car warranty at a dealership, that cost could be rolled into the price of your loan as well.
What Affects Your Credit Score?
Your FICO score is what most lenders use to assess your credit. This score is comprised of five factors that are weighted differently to reflect their importance. In the chart below, you can see how much each of these factors counts toward your overall credit score.
How To Improve Your Credit Score
Increasing your credit score takes time and financial discipline. As you can see from the differences in APRs, however, it’s more than worth it to improve your score. Here are a few things that will help to increase your credit rating over time:
- Make sure that all bills are paid on time.
- Avoid hard inquiries on your credit report unless absolutely necessary.
- Focus on paying down your smallest debts first.
- Consolidate debts into one monthly payment with lower interest.
- Review your full credit report and look for any errors to resolve. You can get a free report from each credit bureau every year.
- Don’t close credit cards or charge accounts after you pay them off.
- Shoot for using 30% of your available credit or less. In addition to paying down your balances, try increasing your current credit limit to do this.
- Open new lines of credit but don’t carry a balance on them. Instead, pay them off in full each billing cycle.
- Open other types of credit lines to improve your credit mix. Add a personal loan or credit card to your portfolio if you don’t have one already.
Car Loans With Bad Credit: Conclusion
Bad credit car loans can be difficult to find and come with painful interest rates. However, some lenders offer better APRs than others to people with poor credit. By taking an organized approach and comparing several options, you can find better rates.
The good news is that paying off your bad credit auto loan will help to raise your score if you make all payments on time and in full. Combined with other healthy financial habits, you can improve your credit score and gain access to better rates. Once you do, you can refinance your auto loan to save additional money.
Auto Loans With Bad Credit: Online Auto Lenders
Today, many companies offer online loan prequalification with just a few clicks. To find the right financing option for bad credit car loans, we recommend comparing multiple auto lenders and reading about the terms of each loan. Below are some highly rated bad credit car loan providers that are worth considering as you compare rates.
Compare Bad Credit Car Loans
Compare which options fit your budget, credit score, and term length below.
- All
- 36 to 72 months
- 24 to 84 months
- All
- 500
- 510
- 575
Used Car Loan
Cred Score
Rate Term
APR*
- Great for customers with limited/no credit
- Offers special military rates
- A+ BBB rating
Used Car Loan
Cred Score
Rate Term
APR*
- Below-average credit scores accepted
- Great interest rates
- Smooth and easy online experience
Refinance Loan
Cred Score
Rate Term
APR*
- No application fee
- Lending platform that partners with banks
- Approval and loan terms based on many variables, including education and employment
Car Loans For Bad Credit: FAQ
Below are the answers to some frequently asked questions about bad credit car loans:
Can I get guaranteed approval for bad credit car loans?
Yes, but be aware that these bad credit car loans are often at higher rates than from other subprime dealers. They are not completely guaranteed and instead often require a minimum income and a down payment.
Where can I get bad credit car loans?
A number of companies offer financing for people with bad credit including myAutoloan, Capital One, and Auto Credit Express. You may also find loan offers from your local bank or credit union, especially if someone with better credit co-signs.
Can I get a car loan with a 500 credit score?
While you can get a car loan with a credit score of 500, you’ll pay more overall. According to Experian’s State of the Automotive Finance Market Q4 2022 report, drivers with a score of 300 to 500 pay average rates of 13.42% for new cars and 20.62% for used cars.
Can I get a car loan with very poor credit?
Yes, you can get a car loan with very poor credit. You’ll pay more for interest in the long term, so it can be a good idea to choose a cheaper car or get a co-signer. In any case, multiple providers cater specifically to people with poor credit scores.
Where can I get car loans for bad credit?
You can get car loans for bad credit through many different subprime auto lenders, banks, credit unions, and dealerships. We recommend getting prequalified and comparing provider offers before making a commitment.
What happens if you miss a car payment?
Several things can happen when you miss a car payment. Your credit score will likely decrease and you may face penalties from your auto lender. You also risk repossession of your car if you fail to meet your obligations.
Our Methodology
Our expert review team takes satisfaction in providing accurate and unbiased information. We identified the following rating categories based on consumer survey data and conducted extensive research to formulate rankings of the best auto loan providers.
- Industry Standing: Trust and reliability are two of the most important qualities in a lender. Our team considers current industry ratings from organizations such as the Better Business Bureau (BBB) along with factors such as a company’s age.
- Availability: We examine how easy it is for borrowers to get a loan from each provider. Lenders that offer loans to meet a variety of customer needs receive high ratings.
- Loan Details: Our researchers comb through the fine print to learn about the loan amounts, term lengths, and types of loans each provider offers.
- Rates and Discounts: We take an in-depth look at the range of rates each provider offers for borrowers of different credit scores. Our team also factors in the discounts available with each lender.
- Customer Service: Our team considers customer reviews and complaints when determining this score. We also consider the ease and availability of help online, over the phone, or in person.
*Data accurate at time of publication.
