Are you worried that you need to buy a car and your credit isn’t up to the task?
Rest assured that buying a car with bad credit is probably more doable than it’s ever been before.
Much of that has to do with the Internet, and the ability it provides for lenders and dealers to network with one another.
By doing so, they’re able to make loans available to consumers with bad credit who might not have been able to get financing just a few years ago.
In this guide, we’re going to describe what we believe to be the best providers of bad credit car loans to help you find the financing that will work best for you.
The 7 Best Providers of Bad Credit Auto Loans
Here are the top providers of bad credit car loans:
- Auto Credit Express: Best for Low Down Payments
- Car.Loan.com: Best for Borrowers in Bankruptcy
- myAutoloan.com: Best for Refinance with No Payment for Up to 90 Days
- Capital One: Best for Dealer Network Financing
- Carvana: Best for Buying a Car Online
- LendingClub: Best for Unrestricted Loan Funds
- LendingTree Auto: Best for Online Auto Loan Marketplace
Auto Credit Express
Auto Credit Express can help just about anyone get a car loan, whether you have good credit or bad. The company was founded in 1999, so it’s no fly-by-night business. They advertise participating in the largest network of car buying and financing resources in North America.
They work with lenders that can accommodate all credit levels, including no credit at all. A typical down payment is $500.
- Credit/credit score requirements: All credit levels, including poor credit and no credit. That includes collections, loan defaults, repossessions and even bankruptcy. No minimum credit score requirement is indicated.
- Minimum income requirement/debt-to-income ratio: $1,500 per month and you must be employed full-time.
- Interest rate range: varies depending on the lender
- Vehicle requirements: No minimum standards disclosed, all vehicle types considered. They even offer a Military Auto Loan program to help members of the military, including active duty, reserves, or retired.
Learn More: Read our full Auto Credit Express Review.
Car.Loan.com advertises that they will extend loans to people “before, during, and after bankruptcy”. This is a significant departure from the industry norm, which is to extend financing only after a bankruptcy has been discharged.
Even if you’re filing a Chapter 7 bankruptcy, you can complete a request as soon as you’ve had your initial meeting of the creditors. You can also get financing if you are currently involved in a Chapter 13 repayment program.
And not only does Car.Loan.com provide the financing, but they also help you find a participating dealership in your area. They advertise that you’ll get a loan decision within 24 hours of application. That process is slower than some of the lenders on this list, but then this company accepts more challenging credit profiles than most others.
- Credit/credit score requirements: No minimum credit score. All types of credit accepted, including bad credit and no credit. The company actively advertises financing for those in all stages of bankruptcy.
- Minimum income requirement/debt-to-income ratio: Not indicated.
- Interest rate range: Up to 25%, but varies by vehicle type and credit profile.
- Vehicle requirements: Any vehicle available through the participating network dealership.
Learn More: Read our full Car.Loan.com Review.
myAutoloan.com advertises refinances with no payments for up to 90 days for qualified borrowers. They provide financing for both new and used vehicles, including private party purchases and lease buyouts.
Loan terms range from 36 months to 84 months, and the company has very competitive rates if you have good credit.
The company is an online auto loan marketplace, enabling you to get loan offers from multiple lenders by completing a single application. Loans are available in all states except Alaska and Hawaii. The minimum loan amount is $8,000 on purchases and lease buyouts, and $5,000 for refinances. No maximum loan limit is indicated.
- Credit/credit score requirements: Minimum credit score 550.
- Minimum income requirement/debt-to-income ratio: Minimum $21,000 annual income for purchases, private party transactions and lease buyouts; minimum $18,000 annual income for refinances.
- Interest rate range: Not indicated – varies by lender, loan amount, geographic location, and credit profile.
- Vehicle requirements: Must be no more than 10 years old with a maximum of 125,000 miles.
Learn More: Read our full myAutoloan.com Review.
Capital One is the lone name-brand bank on our list, which makes it at least somewhat unusual. After all, most banks insist on good or excellent credit before they’ll even consider making an auto loan or extending any other type of financing. But this is where Capital One has broken ranks with most of its competitors.
Capital One works with a network of more than 12,000 dealers, providing “in-house” financing through the dealerships. That also means you will need to purchase your vehicle from a participating dealer, at least if you want a bad credit auto loan. However, you will be able to prequalify on the Capital One auto loan website. Loan amounts range from $7,500 to a maximum of $50,000. Loan terms are from 36 to 72 months.
Please be aware that the service is not available to residents in Alaska or Hawaii. Also, the bank’s fine print makes it clear that a prequalification does not constitute a final approval.
- Credit/credit score requirements: Minimum credit score 500 but you must have an existing Capital One account in good standing.
- Minimum income requirement/debt-to-income ratio: $1,500 to $1,800 per month.
- Interest rate range: Not indicated.
- Vehicle requirements: Can be new or used, but must be no more than 10 years old and with no more than 120,000 miles. Refinancing is not available on the following vehicle makes: Oldsmobile, Daewoo, Suzuki, Saab, or Isuzu.
Learn More: Read our full Capital One Auto Finance Review.
Carvana has popularized the all-online car buying experience. In fact, the process completely eliminates dealerships entirely. You can purchase a vehicle online 24 hours a day from your smartphone or your home computer.
And once you make the purchase, you can have the vehicle delivered to your home. They’ll even accept a trade-in on your current vehicle. And as you might expect, they also provide the financing.
Once you’re on the Carvana website, you can complete an online application in a matter of minutes, and get loan quotes that will be valid for 45 days.
- Credit/credit score requirements: All credit types, though you won’t be approved if you have no credit at all. Carvana also doesn’t provide financing if you have an active bankruptcy (must be discharged).
- Minimum income requirement/debt-to-income ratio: Minimum income requirement of $4,000 per year.
- Interest rate range: Not indicated.
- Vehicle requirements: Financing is eligible only for vehicles purchased through Carvana.com. It is not available for financing on vehicles purchased elsewhere.
Learn More: Read our full Carvana Review.
Lending Club is a peer-to-peer (P2P) online loan source. Investors fund loans on the platform in exchange for the interest income, while borrowers come to take loans. The process eliminates the middleman, which is the bank, and brings investors and borrowers together on the same platform.
Technically speaking, LendingClub has no formal auto loans available – only refinances. The minimum loan amount is $5,000, up to a maximum of $55,000, and you must have at least 24 months remaining on your current loan to be eligible.
Even though the platform offers the only auto refinance loans, you can still purchase a vehicle with a LendingClub personal loan. Those are unsecured term loans available for up to $40,000. They can be used for virtually any purpose, including the purchase of a car. Loans are available in fixed terms of 36 or 60 months, with fixed interest rates and monthly payments.
- Credit/credit score requirements: Minimum credit score 600.
- Minimum income requirement/debt-to-income ratio: No minimum income requirement, but debt to income ratio cannot exceed 40%.
- Interest rate range: 10.68% to 35.89% APR, with no prepayment penalties. However, you should be aware that if you take a LendingClub personal loan to purchase a vehicle, it will also be required you to pay a one-time origination fee equal to between 2% and 6% of your loan amount.
- Vehicle requirements: On refinances, vehicles must be no more than 10 years old and with under 120,000 miles. Since purchases are made with a personal loan, there are no specific vehicle requirements.
Learn More: Read our full Lending Club Review.
Lending Tree Auto is an online loan marketplace, and probably the best-known such site in the industry. In addition to auto loans, it also offers mortgages, personal loans, credit cards, business loans, and more.
However, LendingTree is not a direct lender, but instead acts as an online platform where you can solicit loan quotes from multiple lenders by completing a single questionnaire.
Once you choose a lender, you’ll need to make application with that lender. Specific loan terms and requirements will vary based on the guidelines of that particular lender.
However, the LendingTree website is free to use. And since so many lenders participate on the platform, auto loans are available for all credit levels. Loans are available for purchases, refinances, and lease buyouts. Loan terms range from 1 to 7 years.
- Credit/credit score requirements: Varies by lender selected.
- Minimum income requirement/debt-to-income ratio: Varies by lender selected.
- Interest rate range: Varies by lender selected.
- Vehicle requirements: Varies by lender selected.
Learn More: Read our full LendingTree Auto Loan Review.
What Qualifies as a Bad Credit Car Loan?
There’s no specific standard as to what qualifies as bad credit when it comes to car loans. The industry is incredibly diverse, with hundreds and even thousands of individual lenders. Each sets its own credit standards, which may vary somewhat from one lender to another.
Generally speaking, to get a car loan you’ll need a minimum credit score of 650 to get traditional financing through most banks and credit unions. We can say – at least loosely – that “bad credit” for car loans is any credit score below that.
But your credit score isn’t the sole factor determining your credit profile. Most lenders also have more specific criteria. This extends to the factors that make up your credit score. Those can include recent late payments, collections, loan defaults, repossessions, bankruptcies, and even foreclosures.
It’s possible you may qualify for a loan based on your credit score, but be declined because you have a major derogatory listed on your credit report.
But not to worry, the lenders we have in this guide can extend car financing to just about any credit profile.
You should also be aware that bad credit auto loans can serve as an interim step. You can take one of these loans for the purpose of being able to purchase a vehicle now. But by making all your payments on time, and generally improving your credit going forward, you maybe able in a year or so from now to refinance at a much lower rate.
Please keep this in mind as you peruse our lender reviews.
How to Increase Your Chance of Approval and Lower Your Rate with Car Loans for Bad Credit
One of the complications with car loans for bad credit is that there are so many variations. Depending on your credit score, your credit profile, the vehicle you’re purchasing, the loan amount, the term, and your income, a bad credit auto loan can have an interest rate of anywhere from high single digits to more than 30%.
You owe it to yourself to take any steps you can that will help to a) increase the likelihood your application will be approved, and b) get you the lowest interest rate possible.
You can do that by taking one or more of the following steps:
- Do what you can to improve your credit and your credit score before applying for an auto loan. Increasing your score by just 20 or 30 points can make a huge difference on the interest rate you’ll pay.
- Plan to make a down payment, and the largest one you can. This can often be solved by trading in your existing vehicle. But if you don’t have a trade-in, even scraping together $500 or $1,000 for the down payment can be the difference between approval and denial, and make a major difference in the interest rate.
- Buy less car than you can afford. For example, if your income suggests you can purchase a $20,000 car, you’ll likely get a lower interest rate if you keep the vehicle under $15,000.
- Bring in a cosigner if you’re unable to qualify on your own credit and income, or if you want to get a better deal on the interest rate and terms.
- Shop between multiple lenders. You may find one lender offering a rate at several points lower than the competition. But you won’t know that unless you shop around.
Any one of the above steps will increase your chance of being approved, and decrease the rate you’ll pay. But if you can combine two or more, the benefits will be that much greater.
Final Thoughts on the Best Providers of Bad Credit Car Loans
Knowing there are at least eight of the best providers of bad credit car loans should convince you that you can almost certainly get financing for a car, regardless of your credit situation.
If you do have bad credit, or even no credit at all, make application with one or more of the above lenders or auto loan comparison sites, and you should be driving a new or used car sooner than you think.