bad credit car loans

7 Best Options for Bad Credit Car Loans (2021)

  • There is no minimum credit score to get a car loan.
  • You can get bad credit car loans from a variety of sources.
  • Find better rates by comparing your options and working on raising your credit score.

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If you have a low credit score, you still have options for auto loans. You can get bad credit car loans from a number of banks, credit unions, dealerships, and online lenders. Typically, you’ll pay a higher interest rate. However, you don’t have to settle for the first offer you come across, and it’s always a good idea to compare multiple options. 

In this article, we’ll cover a few reliable bad credit car loan providers and talk about how to get approved and how to increase your credit score. We’ve reviewed the lenders with the best auto loan rates, and we recommend comparing offers from multiple top companies.

7 Best Car Loans for Bad Credit

Below are seven reputable companies that offer bad credit car loans. You’ll see that some of them have minimum FICO credit score requirements, while others do not. Whether or not there’s a credit score requirement, most companies require you to have a certain amount of income each year. You should be prepared to provide supporting documentation in the application process. 

Bad Credit Car Loans Provider Minimum Credit
Score Required
Loan Amounts Minimum
Annual Income
myAutoloan.com 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

MyAutoloan.com

MyAutoloan.com is an online lending marketplace that specializes in bad credit car loans. The company has been around since 2003, which is a long time for an internet-based company. You need a FICO score of 575 and an annual income of $21,000 to qualify for a new car loan. Here are a few additional things that make myAutoloan.com a good option. 

  • Fast service: Customers can receive up to four personalized offers in just a few minutes. 
  • Shopping tools: The website includes a current chart with the lowest interest rates in each category, an interest rate estimator, and a payment calculator to give you a better view of your financial obligations. 
  • High customer ratings: MyAutoloan.com has a 4.3 out of 5.0-star rating from over 700 reviews on Trustpilot. This sets it apart from many smaller online loan providers. The company has also received only about 10 complaints through the Better Business Bureau (BBB) in the past three years.

Capital One Auto Finance

While some banks have high credit score requirements for auto financing, Capital One does not. In fact, Capital One Auto Finance doesn’t require a minimum score at all. Instead, you need to be 18 years of age and make at least $18,000 annually (or $21,600, depending on your credit score). Here are a few highlights of bad credit car loans through Capital One:

  • Keeps your score safe: The pre-qualification process includes a soft pull on your credit, which doesn’t affect your score. 
  • Time to shop: With Capital One Auto Finance, your pre-qualification offer is good for 30 days. That gives you time to shop around at different dealerships in your area. 
  • Choice of dealership: You can use Capital One’s Auto Navigator® to search for vehicles at over 12,000 participating dealerships, which makes the car-buying process easier. 

Auto Credit Express

Auto Credit Express is another online lending marketplace that specializes in bad credit car loans. 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. Here are a few more highlights:

  • Customer service: Auto Credit Express has a 4.7-star rating from customers on Trustpilot, and the company has an A+ rating with accreditation from the BBB. 
  • Good option for during or after bankruptcy: You can find lenders that specialize in auto loans after bankruptcy and even some that provide options during bankruptcy. 
  • Resource center: Auto Credit Express provides a variety of resources for shoppers, including information on credit reports, auto insurance, and refinancing, plus a loan estimator and payment calculator. 

Average Rates for Bad Credit Car Loans

Below are the average rates for new and used car loans by credit score according to Experian’s 2020 State of the Auto Finance Market report. You can see that credit scores play a huge role in interest rates. Remember, 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 score means the borrower is less likely to make on-time payments and poses a higher risk for nonpayment. Auto lenders charge more in interest to offset this risk.

In the chart below, you can also see there are five categories based on credit score: superprime, prime, nonprime, subprime, and deep subprime. Moving from one tier to the next increases average interest rates, but rates jump the most between nonprime and subprime categories. 

Credit Category Credit Score Average Rates
for New Car Loans
Average Rates
for Used Car Loans
Superprime 781 to 850 3.24% 4.08%
Prime 661 to 780 4.21% 6.05%
Nonprime 601 to 660 7.14% 11.41%
Subprime 501 to 600 11.33% 17.78%
Deep Subprime 300 to 500 13.97% 20.67%

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Keep in mind that your interest rate 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. 

How to Get Approved for a Car Loan with Bad Credit

Here are a few ways to improve your chances of finding the best bad credit auto loans and terms for your situation.

  • Buy from a private seller: You can avoid the car dealership markup by shopping from a private seller instead. 
  • Skip the financing and pay in cash: You can sometimes save thousands by purchasing a low-cost vehicle with cash and waiting to make a bigger car purchase until you have good credit. 
  • Take out a personal loan instead: Depending on your credit score, you might find it easier to qualify for a personal loan. Be aware that interest rates for these can be higher. 
  • Put more money down: If you can make a larger down payment, there will be less of the vehicle’s value to finance. You can generally get better interest rates by making a larger down payment. 
  • Get a cosigner: If a family member or close friend can cosign on your loan, the lender will take their credit situation and income into consideration, which means you can secure a lower interest rate. But, if you miss a payment, you’ll affect your own score as well as the cosigner’s. 
  • Get multiple pre-qualification offers: You can find different interest rates and terms from different lenders, so it pays to get preapproval from multiple financial institutions. However, avoid a full loan application with a hard credit check until you’re sure about accepting the terms.

How to Increase Your Credit Before Buying a Car

You can save a lot of money by moving your credit score in the right direction. Let’s look at a quick example of how credit scores affect rates. If you financed a new car with a $15,000 loan for 60 months, you’d pay:

  • $298 monthly ($2,881 in total interest) for a nonprime score
  • $329 monthly ($4,717 in total interest) for a subprime score 
  • $349 monthly ($5,927 in total interest) for a deep subprime score

You can see that a few hundred points on the credit score scale can account for thousands more in interest. If you were to move your score up 100 points, say from 450 to 550, you could expect to save about a thousand dollars in interest on this loan amount. Even moving 25 or 50 points can have a positive impact on the rates you find. If you can take some time to postpone financing a new vehicle, work on some of the following things to raise your score:

  • Make sure all bills are paid up to date.
  • Refinance loans that have high interest rates.
  • Focus on paying down your smallest debts first.
  • Consolidate debts into one monthly payment with lower interest.
  • Don’t close credit cards or charge accounts after you pay them off.
  • Avoid hard inquiries on your credit report unless absolutely necessary.
  • Shoot for using 30% of your available credit or less. You can try increasing your current credit limits to do this.
  • Review your full credit report and look for any errors to resolve. You can get a free report from each credit bureau every year. 
  • If you can open a new credit card with good terms (no fees), do this to raise your total credit limit. But, only charge what you can pay off each month. 

Compare Bad Credit Car Loans From Top Providers

To find the right financing for an auto loan with bad credit, it’s important to compare multiple lenders and read about the terms of each loan. A few years ago, that meant physically going around to banks, credit unions, and dealerships. Today, many companies offer online loan pre-qualification offers with just a few clicks.

Can I get a car loan with a 500 credit score?

Yes, you can get a car loan with a credit score of 500, but you’ll pay more overall. According to Experian’s 2020 State of the Auto Finance Market report, drivers with a score of 300 to 500 pay average rates of 13.97% for new cars and 20.67% 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 cosigner. In any case, multiple providers cater specifically to people with poor credit scores.

Who will finance a car with bad credit?

A number of companies offer financing for people with bad credit, including myAutoloan.com, 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 can cosign for you.

Can I get a car loan with a 450 credit score?

Yes, you can get a car loan with a 450 credit score. This score falls into the “deep subprime” range, and drivers in this category pay 13.97% interest for new cars and 20.67% interest for used cars on average (according to Experian data).