How to get a car loan with bad credit

Saving up for a down payment and comparing multiple lenders can help.

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If you have bad credit, you know that getting a car loan can be a daunting process. But hope isn’t lost — there are lenders that specialize in offering loans to borrowers who may not have the best credit history.

Our top pick: Car Loans

  • Min. Credit Score Required: 300
  • APR: Varies by network lender
  • Requirements: Must be a US citizen with a current US address and employed full-time or have guaranteed fixed income.
  • Easy online application
  • Fast response time
  • Bad credit, no credit OK

Our top pick: Car Loans

Apply with a simple online application to get paired with a local auto lender. No credit and bad credit accepted.

  • Min. Credit Score Required: 300
  • Requirements: Must be a US citizen with a current US address and employed full-time or have guaranteed fixed income.

How to get a car loan with bad credit

Getting a car loan with bad credit is a lot like getting any other type of car loan. However, you might have to work a little harder to find the best deal.

  • Save for a down payment. The best way to show a lender you’re serious is to have a down payment saved up. Most experts recommend having at least 10% of the car’s value before you buy, but 20% can help you borrow less — and potentially at a lower rate.
  • Apply for preapproval. Dealerships tend to offer high rates — especially when you have bad credit. By applying for preapproval with a lender before you visit the dealership, you’ll have the upper hand when it comes to negotiating your terms.
  • Check your credit report. A mistake on your credit report can cost you points on your credit score. You can get a copy of your credit report for free and fix mistakes by contacting the creditor.
  • Compare multiple lenders. Using a connection service that specializes in bad credit financing can help you quickly get an idea of what rates you’re eligible for, but you might not want to just stick to one — many of these are limited to their network of partners.
  • Read the fine print. Many states have limits on car loan APRs, and some bad credit lenders try to sneak around these by tacking on over-priced add-ons in the contract.
  • Ask an expert. Worried you won’t qualify? Sign up for a credit counseling session to have an expert guide you through your options. You can find a legit credit counselor on the Department of Justice’s website.

Compare bad-credit car loans

Updated March 31st, 2020
Name Product Filter Values Minimum credit score APR Loan term Requirements Car Loans
Varies by network lender
Varies by lender
Must be a US citizen with a current US address and employed full-time or have guaranteed fixed income.
Apply with a simple online application to get paired with a local auto lender. No credit and bad credit accepted.
SuperMoney Auto Purchase Loans Marketplace
Varies by lender
Varies by lender
Fair to excellent credit, an income source, US citizen or permanent resident, 18+ years old
Find an offer and get rates from competing lenders without affecting your credit score.
CarsDirect Auto Loans
Varies by network lender
Varies by network lender
Must provide proof of income, proof of residence, and proof of insurance.
Save time and effort with this lending service specializing in beginner-friendly or subprime car loan.
Auto Credit Express Car Loans
Varies by network lender
Varies by lender
Must be employed full-time or have guaranteed fixed income of at least $1,500/month and be a current resident of the US or Canada.
Get connected with an auto lender near you, even if you have bad credit.
Monevo Auto Loans
3.99% to 35.99%
3 months to 12 years
Credit score of 500+, legal US resident and ages 18+.
Quickly compare multiple online lenders with competitive rates depending on your credit.
LightStream Auto Loans
Good to excellent credit
2 to 7 years
Good or excellent credit, enough income or assets to afford a new loan, US citizen or permanent resident, 18+ years old
Quick car loans from $5,000 to $100,000 with competitive rates for borrowers with strong credit.
Good to excellent credit
Starting at 3.09%
Varies by lender
18+ years old, good to excellent credit, US citizen
Compare multiple financing options for auto refinance, new car purchase, used car purchase and lease buy out.

Compare up to 4 providers

Bad credit commodore7 questions to ask about bad-credit car loans

Before you apply for a bad-credit car loan — also known as a subprime auto loan — find out as much as you can about the offer you’re getting. Ask yourself these questions before you apply.

  1. What’s the APR? To get an idea of how much your loan is going to cost, look to the APR. The APR includes both interest and fees and is the easiest way to make a quick comparison of loans with the same terms.
  2. Is the loan secured or unsecured? If you take out a secured loan, the lender uses your car as collateral. While this means you may have a lower rate, you run the risk of having the car repossessed if you default on the loan.
  3. What’s my loan term? Loan terms can run from one to seven years. A shorter loan term can reduce the amount of interest you pay — but monthly payments will be higher. On the other hand, choosing a longer loan term will reduce your monthly payments, increasing the amount of interest you end up paying.
  4. How much will I pay each month? You want to find affordable monthly payments. It’s important to choose a loan term that suits your income and is in line with your financial plans.
  5. Can I afford extra payments? The flexibility of making extra payments can help you get out of debt much quicker. Check with your lender to see if it allows extra payments.
  6. What are the fees? Bad credit loans often come with more fees than other types if car loans.Some lenders charge a monthly account fee or administration fee, ranging from $5 to $15 per month. Many will also charge an origination fee when issuing your funds, usually 1% to 5% of the loan amount.
  7. Can I pay it off early free of charge? Some loans include early repayment fees if the loan is paid in full before the agreed loan term date. If you intend to make extra payments to pay your debt off sooner, check how much you might be charged.

Mistakes to avoid with a bad-credit car loan

Make sure you know exactly what you’re getting into before you sign up for a car loan — or any loan. If you don’t do your research, you could find yourself in a financial nightmare, or worse — in a scam.

  • Going over budget. Work out how much money you’ll be paying back over the course of the loan to get an idea of how much you’ll spend on your vehicle — is it worth it, and more importantly can you afford it?
  • Not checking reviews. Check review sites, messages boards and car enthusiast websites to see what other people have to say about certain lenders. If you know someones who’s been in a similar position when financing a car purchase, ask them.
  • Extremely long loan terms. Some lenders offer loan terms of six and seven years that can accrue major interest over time. Sure, the monthly payments will be lower, but if it’s not absolutely necessary, it should be avoided to save money.
  • Being unprepared. Check your credit score before you do any car shopping so the dealer or lender can’t take advantage of you. Also, by knowing interest rates that other lenders offer, you’ll be able to compare and find the most competitive deal.
  • Making an impulsive purchase. Of course your dream car is out there. But if you have poor credit, it may have to wait so you can buy a car you can afford — and has lower rates.
  • Falling for a scam. There are some common scams and tactics you should be aware of when you’re shopping for a car loan. Don’t let a predatory lender push you into making the wrong financial move.

Don’t forget to negotiate

If you’ve gotten preapproved for a car loan, you’re in a good spot — even if you have bad credit. You won’t have to rely on the dealership to finance you, so you can negotiate the price of your car and any other features without worrying if you can afford the car. Best of all, you may be in a position to get an even better deal. Your sales person might be willing to match the interest rate or terms you have with your current lender.

Your sales person might also try to throw in extra and incentive. Be wary. Many of these, like an extended car warranty, will cost you much more than they’re worth. Negotiate the price of the car and the terms of financing, and only go for extras if you think you’ll really use it.

Alternatives to consider

The best alternative to a car loan is to build your savings. You can also work toward improving your credit score to help get a better interest rate in the future.

If you can’t wait, you could potentially borrow a personal loan to buy a car or consider using a credit card to buy a car. These both come with their own risks, so consider your options carefully before borrowing.

Compare car loans for bad credit

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2 Responses

  1. Default Gravatar
    CandaceFebruary 11, 2019

    I currently owe under $3000 on an auto loan. Unfortunately, the lender is no longer functional. Is it possible to roll that loan into a new loan?

    • Avatarfinder Customer Care
      JoshuaFebruary 18, 2019Staff

      Hi Candace,

      Thanks for getting in touch with Finder. I hope all is well with you. :)

      It is possible depending on what your terms and conditions stipulate. Generally speaking, even if your lender goes out of business, you would still need to pay your loan obligation. In most cases, your loan would be sold to another lender and then you would pay to the new lender.

      It is best to speak to your lender to know if you can roll that loan to another loan.

      I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.

      Have a wonderful day!


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