Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our content.
Best bad credit car loans
Find a lender that looks beyond your credit score.
Updated . What changed?
We compared the rates, terms and services available through car loan providers that accept bad credit. Since many bad credit options are available through local lenders and dealerships, we included multiple connection services to make sure we covered the most options.
5 best car loans for bad credit
Best for buying a car completely online: Carvana
- Long 45-day preapproval
- Return car at no cost in seven days
- Low $4,000 annual income requirement
- No new car financing
- Difficult to negotiate a better deal
- Can't use financing outside Carvana
|APR||3.9% – 27.9%|
|Term||Starting at 12 months|
|Interest Rate Type||Fixed|
Best for comparing lenders that accept bad credit: myAutoloan.com Car Loans
- New and used car loans
- Only requires 550 credit score
- Partners are transparent about costs
- No loans under $8,000
- Strict minimum income requirement
- Complaints about marketing materials
|Loan amount||$8,000 – $100,000|
|APR||1.79% – 27%|
|Interest Rate Type||Variable|
|Min. Credit Score||550|
Best for financing a used car: CarMax used car financing
- Same-day financing available
- Seven-day test drive period
- Three-day window to return loan
- Only available for CarMax cars
- Potentially high rates with bad credit
- Might require in-person application
|APR||Starting at 3.5%|
|Term||Starting at 36 months|
|Interest Rate Type||Fixed|
Best for refinancing: LendingClub Auto Refinancing
- Accepts 10-year-old vehicles
- Works with up to 120,000 miles
- Accepts cosigners
- Minimum $5,000 balance
- Requires at least two years left on term
- Takes as long as 14 days
|Loan amount||$5,000 – $55,000|
|APR||7% – 24.99%|
|Interest Rate Type||Fixed|
|Min. Credit Score||580|
Best for when you're recovering from a bankruptcy: Auto Credit Express Car Loans
- Private party and rent-to-own loans available
- Reltively low rates for bad credit
- Works with recently bankrupt borrowers
- Potentially high rates with bankruptcy
- High monthly income requirement of $1,500
- Will receive calls from lenders
|Term||Starting at 36 months|
|Interest Rate Type||Fixed|
|Min. Credit Score||300|
Summary of best auto loans for bad credit
|Lender||Best for …||What sets it apart||APR|
|Carvana||Buying a car completely online||A long preapproval period of 45 days and seven days to return a vehicle at no cost.||3.9% to 27.9%|
|myAutoloan.com||Comparing lenders that accept bad credit||A network of new and used car financing providers that are transparent about costs||1.79% to 27%|
|CarMax||Financing a used car||Same-day approval and seven days to test drive a vehicle||Not available||Read review|
|LendingClub||Refinancing||Accepts 10-year old vehicles with up to 120,000 miles||7% to 24.99%|
|Auto Credit Express||Borrowers recovering from a bankruptcy||Accepts borrowers with. bankruptcy on credit report||Not available|
What rates can I expect with bad credit?
Generally, borrowers with bad credit can qualify for rates between 10% and over 20%. The rate you get can vary depending on if you buy a new or used car and how low your credit score actually is.
|Credit sore range||Average rate on a used car||Average rate on a new car|
Your rate also depends on your financial health outside of your credit score. If your credit score is low but your income is steady and you have few debts, you could potentially qualify for a lower rate. But you still probably won’t qualify lenders that offer the lowest rates, like LightStream.
But if you have a bankruptcy or foreclosure on your credit report, you might get an even higher rate. If you can qualify at all.
Compare more bad credit car loans
Select your credit range and the state you live in for more personalized options.
How to get a car loan with bad credit
The process for getting a car loan with bad credit isn’t too different from getting one with good credit. The main difference is the first step.
- Take quick steps to improve your credit. Paying down your credit card debt or other loans can quickly get you in better shape to qualify for a car loan.
- Set a budget. Come up with a limit to how much you’re willing to spend on the car, how much you can afford for the down payment and how much you can pay each month.
- 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.
- Compare offers. Apply for preapproval with a few providers to see what rates and terms you’re eligible to qualify with. If they run a hard credit check, make sure to keep your applications within a few weeks to avoid hurting your credit score.
- Review and sign your documents. Go over the terms and conditions of your loans and when your first payment is due before signing off on the loan.
Are there car loans for no credit?
Yes, there are car loans available if you have no credit or a limited credit history. Many of our top picks for borrowers with bad credit will work with borrowers who don’t have credit. This means that you should expect higher rates and more strict loan terms — including limits on how much you can borrow.
Like with bad credit, you may also want to apply with a cosigner and have a large down payment saved to help increase your chances of being approved for a loan. If you don’t need a car loan immediately, you may also want to consider smaller loans and credit cards to help build your credit. Be cautious when applying, however. Too many recent credit checks and new loans could make it more difficult to find a car loan in the future.
7 tips to qualify for a car loan
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.
- Start with a connection service. Using a connection service like LendingTree or RoadLoans.com can help you quickly compare offers from multiple lenders and make it easy to understand the ranges of rates you’re generally eligible for.
- Apply with a cosigner or coborrower. Bringing on someone with a higher credit score can increase your chances of approval for a loan. And if you plan on sharing the car, you’ll share the responsibility of paying it off.
- 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.
- Get preapproved. 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.
- 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 overpriced 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.
Avoid these mistakes
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.
Negotiate a better deal
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.
Frequently asked questions
More guides on Finder
You can now pay for car insurance in Bitcoin – here’s how
You can pay for car insurance in Bitcoin, even if your insurer doesn’t accept it yet.
Texas disaster assistance for the 2021 Winter Storm
Here’s where to get financial help for yourself and your business if you’ve been affected by the storm in February 2021.
How to deal with debt when you have bad credit
Credit counseling, debt relief programs and more options to consider.
Best credit cards for rewards in 2021
Take advantage of miles, points and perks with a card that best fits your lifestyle.
Should I max out my 401(k)?
The rush of turning $19,500 into $1 million can be enticing, but it’s not always the best idea.
Best business credit cards for 2021
Here are our top picks for 2021.
FHA homeowners have until February 28th to apply for a payment forbearance
Find out how to apply — plus explore alternatives to deferring your payments.
Tomo Credit Card review
A solid cashback card with no credit history required to apply for it.
Direct Funding Now review
This lender’s lack of transparency may make it more difficult to know what you’re getting into.
Best secured credit cards of 2021
Our top picks can help you build your credit without paying sky-high fees.
Ask an Expert