Are you worried you need to buy a car and your credit score isn’t up to the task?
Well, buying a car with a bad credit history is probably more possible now than ever before thanks to the Internet.
Online banking lets auto lenders and car dealerships to network with each another, and it allows car buyers to compare loans.
In this guide, I’ll 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.
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
In the old days, buying a car meant filling out a loan application and hoping for the best. Now, with loan matching services like Auto Credit Express, car buyers can know their loan options before showing up at a car dealership.
Auto Credit Express matches car buyers with auto financing they can qualify for. Founded in 1999, this platform is no fly-by-night business.
Its partner lenders can find options for borrowers at 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 can apply — even if your credit report includes collections, loan defaults, repossessions, or even bankruptcy. There is no minimum credit score requirement. That being said, the better your creditworthiness, the more loan options you’ll see.
- 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 partner lender
- Vehicle requirements: No minimum standards disclosed, all vehicle types considered. Auto Credit Express even offers 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 says it 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 it also helps you find a participating car dealership in your area.
This service advertises that you’ll get a loan decision within 24 hours of submitting your loan 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 car payments for up to 90 days for qualified borrowers. This platform provides financing for both new cars and used cars, 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.
Like Auto Credit Express, myAutoloan.com is an online auto loan marketplace. It helps you see loan offers from multiple lenders by completing a single application.
Car buyers in all states except Alaska and Hawaii can use myAutoloan.com. 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 lender 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 car dealerships, 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 this 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 FICO score of 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: New or used car loans but used cars can 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. You can buy a vehicle online 24 hours a day from your smartphone or computer.
And once you make the purchase, you can have the vehicle delivered to your home. Carvana will even accept a trade-in on your current vehicle. And as you might expect, Carvana also provides the financing.
Once you’re on the Carvana website, you can complete an online loan 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. That means investors fund loans on the platform in exchange for the interest income.
This process eliminates the middleman, which is the bank, and brings investors and borrowers together on the same platform.
This sounds great, but skipping the bank doesn’t make LendingClub a subprime lender that bypasses the credit bureaus. Rather than getting a bank to approve your loan, you’ll have to convince individual investors to take a chance on you.
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.
Personal loans are unsecured term loans available for up to $40,000 — typically at higher interest rates than a secured auto loan. Personal loans can be used for virtually any purpose, including the purchase of a car.
LendingClub 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: 8.05% to 35.89% APR, with no prepayment penalties. However, you should be aware LendingClub personal loans charge upfront origination fees 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
LendingTree Auto is an online loan marketplace, and probably the best-known such site in the industry. In addition to auto loans, LendingTree also offers mortgages, personal loans, credit cards, business loans, and more.
However, LendingTree is not a direct lender. It’s 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 an application with that lender. Specific loan terms and requirements will vary based on the guidelines of that particular lender.
But LendingTree’s website is free to use, and it provides a way to compare loan offers quickly.
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.
(Rates current as of 3/5/21)
What Qualifies as a Bad Credit Car Loan?
There’s no specific definition for a bad credit auto lender.
For most car buyers who use traditional banks and credit unions, getting a car loan requires a minimum credit score of 650. So we can say – at least generally – that “bad credit” for car loans is any credit score below 650.
But your credit score isn’t the only factor lenders consider. Most lenders also have more specific criteria.
This includes the factors making up your credit score. Those can include recent late payments, collections, loan defaults, repossessions, bankruptcies, and even foreclosures.
It’s possible to qualify based on your credit score but be declined a loan because the credit check revealed late payments, missed payments, or an old repossession.
But don’t worry, the lenders in this guide can extend auto financing to just about any credit profile.
Use Bad Credit Loans as a Stepping Stone
You should also be aware that bad credit auto loans can serve as an interim step in your journey to better credit.
You could take out one of these loans to get into a vehicle now. But making all your payments on time could improve your credit going forward.
Within a year, you may be able to refinance at a lower interest rate and loan payment.
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 the number of variables. They include:
- your credit check
- the vehicle you’re buying
- the loan amount
- the loan term
- your income
Sometimes these variables contradict each other. For example, a lender may approve you but not your vehicle. Or it may approve you but only for a certain loan amount that’s not enough.
Finding a lender that lines up as a “yes” on all the variables you need can limit your loan options. That’s how people get into auto loans with interest rates approaching 30%.
The auto loan finders on the list above can help you avoid this scenario since they work with so many different lenders.
Steps to Help Yourself Get a Better Car Loan
You owe it to yourself to take steps that will
- increase the likelihood your application will be approved
- get you the lowest interest rate possible.
You can do that by taking one or more of these steps:
Improve Your Credit:
Do what you can to improve your credit history 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. Since your payment history influences your FICO score, try to make on-time payments 100% of the time.
Bring Your Own Money:
Plan to make a down payment, and make 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. It can also help avoid those high-interest rates.
Limit Loan Amounts:
Buy less car than you can afford. For example, if your income or low credit score suggests you can buy a $10,000 car, you’ll likely get a lower interest rate if you keep the vehicle under $8,000.
Ask for Help:
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 different 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.
Avoid Hard Credit Checks:
Try to get a pre-approval rather than applying for multiple loans. Each time a lender checks your credit, you risk making your bad credit even worse. Check your own credit history with Experian, Equifax, and TransUnion before applying for a loan. (Visit annualcreditreport.com to see your reports.)
Don’t Finance a Warranty:
Avoid financing the costs of a used car warranty into your loan. Adding the expense of a warranty to your loan amount could push your purchase price beyond the loan limits of your ideal auto lender.
Any one of the above steps will increase your chance of being approved, and decrease the interest rate you’ll pay. But if you can combine two or more, the benefits will be that much greater.
Which Bad Credit Car Loan Provider is Best For You?
Seeing at least seven possibilities for bad credit car loans shows 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 an application with one or more of the above online lenders or auto loan comparison sites. You could be driving a new or used car sooner than you think.
But don’t stop there. Keep working on your credit so you’ll never have to Google “bad credit car loans” ever again.
Like I said above, a bad credit car loan can be a stepping stone to better borrowing options in the future — including a new car loan at a competitively low APR.
Shoot for a perfect payment history on your next loan. Financial institutions pay attention when borrowers have perfect payment histories. That’s why your FICO score emphasizes payment history so much.
The FICO scoring model also emphasizes your credit utilization ratio. By paying down your credit cards and keeping some accounts open even after you’ve paid off the entire balance, you’ll be helping your credit score.