How do I improve my credit?

The process of improving your credit takes quite a bit of time. But the stronger your credit is, the better rates and terms you will receive. Some ways to work towards increasing your credit score include: Keeping track of your credit score. Making payments on time. Paying down debt. Taking advantage of self-reporting. Only applying for loans you can truly afford. Not applying for too many different kinds of accounts at once.

Will having a co-signer increase my likelihood of approval?

Applying for a loan with a co-signer who has excellent credit will greatly increase your likelihood of gaining loan approval. The role of a co-signer serves as an extra layer of protection for the lender. The lender gains security because the co-signer is on the hook for payments if the primary borrower can't make them. Because of this, having a co-signer can earn you a decent rate and term, even if you don't have the best credit.

What is the lowest score you can get a car loan with?

While this answer varies by specific lender, the better your score is, the better your rates and terms will be. If you have low or no credit, you may still qualify for a loan but should expect a steeper APR. In the fourth quarter of 2023, drivers with scores of 500 or lower received an average rate of 14.78 percent for new and 21.55 percent for used cars, according to Experian. However, these borrowers made up only 0.32 percent of approved loans. Fortunately, a few lenders are moving away from using credit scores as the sole measure of ability to pay off loans. Instead, lenders are considering factors such as work or education history.

What should I do if I get denied a car loan due to poor credit?

There are still ways to get behind the wheel following an initial denial. Firstly, it is important to take time to improve your credit. Do this by paying down any debt to lower your credit utilization rate. Otherwise, consider getting a co-signer for your auto loan.

Best bad credit auto loan rates for May 2024

Written by

Rebecca Betterton

Edited by

Pippin Wilbers

Apr 23, 2024

The Bankrate promise

At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editoral integrity, this post may contain references to products from our partners. Here's an explanation for how we make money.

Bankrate’s best auto loans for borrowers with bad credit are selected based on interest rates, terms, transparency and — most importantly — flexible eligibility requirements. While a bad credit auto loan is technically no different from a normal loan, you can expect higher interest rates.

Before approving you for an auto loan, lenders will assess how much of a risk you pose. One major way they assess that is by looking at your credit score. It helps them determine the interest rates and terms available to you.

This means getting lender approval with poor credit history can be a challenge. But it is possible.

FICO defines bad credit as a personal FICO score under 580, though lenders may have their own definitions. Many lenders — including some selected as top bad credit lenders by Bankrate — factor in additional aspects such as payment history on previous auto loans, work history or education.

The process of getting a bad credit car loan is similar to getting any other loan. To get started, follow these steps:

1

Know your credit score.

Having a firm grasp on your credt score will help when comparing lenders. According to FICO, any score below 580 is considered poor.

2

Save for a down payment.

A down payment reduces your monthly payment and offsets lenders' risk. Experts recommend a down payment of 20 percent, but pay what you can.

3

Shop around.

Compare rates and terms from at least three different lenders before moving forward. Pay close attention to APR (annual percentage rate) — which tends to be higher for bad credit auto loans.

4

Apply for preapproval.

Applying for preapproval will give you a better idea of what to expect from loan terms and rates. It will also give you leverage for negotiating rates and the auto’s price. But be aware that the hard credit check can temporarily dip your credit score.

5

Submit application.

To submit your application you will need to provide information about yourself — and potentially the vehicle you're considering. Gather your auto loan documentation ahead of time.

6

Be sure the terms are final.

If you finance through a dealer, find out whether the terms are final before you sign. If you’re offered conditional approval, be wary. You’ll be able to drive off the lot but might face higher rates than you expected.
Choosing the right loan and best lender for you is based on which loan fits your budget and financial needs. When shopping for an auto loan, compare APRs across multiple lenders to make sure you are getting a competitive rate. Look for lenders that keep fees to a minimum and offer repayment terms that fit your needs. It is a good idea to gain at least three quotes before signing off on a loan. Give special attention to the following factors:
- Approval requirements.
Every lender has its own criteria you must meet. This is especially true when it comes to bad credit loans. Pay careful attention to minimum credit requirements to be sure you aren’t applying for a loan outside your range.
- Interest rates.
The APR that lenders will offer is based on your specific financial history. It is important to remember that the lowest interest rate advertised is not what you will receive. When comparing potential rates be sure to calculate additional fees or possible penalties.
- Loan amounts.
Determining the right loan amount requires careful consideration regarding how much vehicle you can afford. Be honest about your budget and use an online calculator before applying.
- Repayment options.
Auto loan terms typically range from 24 to 84 months. The longer your term, the more interest you will pay. But a longer loan will also yield a lower monthly payment. Keep this in mind when deciding the length of your loan.
- Customer service.
Consider the benefits of a lender's customer service on aspects such as online availability, face-to-face communication and hours of operation.


4.2 Bankrate Review	APR from 4.67%	Term 12-96mo	Min credit score 580	Apply on partner site	Apply on partner site
3.7 Bankrate Review	APR from 4.99%	Term 24-84mo	Min credit score 600	Apply on partner site	Apply on partner site
3.6 Bankrate Review	Network of dealer partners has closed $1 billion in bad credit auto loans Specializes in bad credit, no credit, bankruptcy and reposession In business since 1999 Easy, 30-second pre-qualification form Bad credit applicants must have $2000/month income to qualify	Apply on partner site	Apply on partner site
3.6 Bankrate Review	Network of dealer partners has closed $1 billion in bad credit auto loans Specializes in bad credit, no credit, bankruptcy and reposession In business since 1999 Easy, 30-second pre-qualification form Bad credit applicants must have $2000/month income to qualify	Apply on partner site	Apply on partner site
4.5 Bankrate Review	APR from 5.95- 28.55%	Term 24-84mo	Min credit score 640	Apply on partner site	Apply on partner site
3.7 Bankrate Review	APR from 7.09%	Term 24-84mo	Min credit score 600	Apply on partner site	Apply on partner site
3.7 Bankrate Review	APR from 6.84%	Term 24-84mo	Min credit score 600	Apply on partner site	Apply on partner site
4.2 Bankrate Review	APR from 7.24- 15.19% * with AutoPay	Term 24-84mo	Min credit score Not disclosed	Apply on partner site	Apply on partner site
3.9 Bankrate Review	APR from 5.29- 21.99%	Term 24-96mo	Min credit score 580	Apply on partner site	Apply on partner site
4.4 Bankrate Review	APR from 5.49- 18.79%	Term 24-96mo	Min credit score 560	Apply on partner site	Apply on partner site

Compare the best bad credit auto loan rates in May 2024

Lender	APR range	Term
Capital One	Not specified	24 to 84 months
Autopay	Starting at 4.67%	12 to 96 months
Carvana	7.95%-27.95%	12 to 72 months
iLending	5.49%-18.79%	12 to 96 months

Loan details presented here are current as of April 3, 2024. Check the lenders’ websites for more current information. The auto loan lenders listed here are selected based on factors such as APR, loan amounts, fees, transparency, credit requirements and more.

Best bad credit auto loan lenders in 2024

Capital One

4.1

Bankrate's editorial team scores lenders based on crucial factors like APR ranges, loan amounts, total loan costs including fees and discounts, customer experience and tools such as mobile apps. The options expressed are the opinion of the Bankrate staff. Our partners compensate us, but partner relationships do not influence our reviews or scoring.

See offers

Apply on partner site

Min. credit score:: Not disclosed
Fixed APR From:: Not disclosed
Loan amount:: Starting at $4,000
Term lengths:: 2 to 7 years
Min. annual income:: Not disclosed

Overview: Capital One offers a fully online experience for new and used purchase loans and refinancing. With no credit requirement, drivers with bad credit can get competitive rates and have the comfort of prequalification.

Why Capital One is the best for prequalification: Applying for prequalification can give you the confidence of a loan offer without the hard credit pull. It provides you with your predicted rate and terms without any impact on your credit.

Pros
No hard credit check

One-stop shop for your loan and vehicle

Prequalification lasts for 30 days
Cons
Limited vehicle inventory

APR range is not disclosed before prequalifying
Who this lender is best for: Drivers who don't mind a limited selection of vehicles and want a large shopping window.

Impact on financial wellness: A soft credit check is used for prequalification. You will undergo a hard credit pull once you fully apply.

Time to receive funds: Capital One borrowers can receive funding as soon as the same day they apply.

Fees: Capital One charges a late fee for loan holders.

Additional requirements: A loan through Capital One cannot be used at any auto dealership. Your vehicle will have to come from one of their 12,000 participating dealerships.

Special features: Done fully online via the Auto Navigator. Once you prequalify current rates and expected monthly costs will be presented for available vehicles.

Best for shopping multiple offers

Autopay

4.2

See offers

Apply on partner site

Min. credit score:: 580
Fixed APR From:: 4.67%
Loan amount:: $8,000– $150,000
Term lengths:: 1 to 8 years
Min. annual income:: Not disclosed

Overview: Autopay is an online marketplace showcasing loans from banks, credit unions and other lending institutions. The convenience of comparing multiple offers helps get the best deal with bad credit.

Why Autopay is the best for shopping multiple offers: The convenience of comparing multiple offers helps get the best deal with bad credit. Although the minimum credit score is not disclosed, the range of lender options fosters a wide range of availability.

Pros
Several lender options with one application

Simple application form to speed up the process

Customer support six days a week
Cons
Maximum APR not disclosed

Not usable for used vehicle purchases

Possible down payment requirement
Who this lender is best for: A driver with poor credit shopping online for a new vehicle or refinancing.

Impact on financial wellness: Borrowers will have to undergo a hard credit pull — which will affect your credit score.

Time to receive funds: Funding is available as soon as one business day following application approval.

Fees: Potential fees vary depending on your matched lender.

Additional requirements: Unfortunately, Autopay does not offer loans for used vehicles. So you will have to shop elsewhere if you're buying used.

Special features: Autopay also offers cash back refinancing and lease payoff refinancing options.

Best for fully online experience

Carvana

4.2

Read our review

Read our Bankrate review

Min. credit score:: Not disclosed
Fixed APR From:: 7.95% –27.95%
Loan amount:: From $1,000
Term lengths:: 1 to 6 years
Min. annual income:: $5,100

Overview: Carvana is an online car buying and financing option, which allows drivers to purchase from its website. It does not have perfect credit requirements, and you can view loan options without a hard credit pull.

Why Carvana is the best for a fully online experience: Although a loan with Carvana can only be achieved by purchasing from its online vehicle platform, Carvana offers loans with a low minimum annual income requirement of $5,100 — much lower than traditional lenders.

Pros
Prequalification available

No minimum credit requirement

Money-back guarantee
Cons
Limited inventory

Down payment required

Possible steep delivery fee
Who this lender is best for: A driver already shopping on the Carvana marketplace for a vehicle.

Impact on financial wellness: A hard credit check will happen following planned vehicle delivery.

Time to receive funds: Funding is available as soon as the same day as approval.

Fees: Carvana charges NSF and late fees.

Additional requirements: Even with a low credit score you are eligible if you have an annual income of at least $5,100 and do not have any current bankruptcies.

Special features: Vehicle and loan approval can all be done from the ease of your home and rates are current for 45 days.

Best for bad credit refinance

iLending

4.2

See offers

Apply on partner site

Min. credit score:: 560
Fixed APR From:: 5.49% –18.79%
Loan amount:: $5,000-$150,000
Term lengths:: 2 to 8 years
Min. annual income:: Not disclosed

Overview: Based on partnerships with banks and credit unions, iLending works to find an improved loan for your financial needs through its network.

Why iLending is the best for refinance: iLending boasts a low credit score requirement of 560 and its structure is built to foster directly to those who need a bad credit refinance loan.

Pros
Assistance from personal lending specialist

Quick application should only take a few minutes

Wide range of terms available
Cons
No new or used purchase loans

Fees are not clearly specified on its website
Who this lender is best for: A driver looking to refinance their current loan with direct assistance from a loan specialist.

Impact on financial wellness: Following the initial application a hard credit pull will be completed.

Time to receive funds: Drivers can receive funds in as soon as one day.

Fees: iLending does not specify potential fees.

Additional requirements: iLending holds specifications for acceptable vehicles for refinancing in terms of age and mileage.

Special features: Drivers will be paired with a loan specialist to talk you through the refinance process.

What are bad credit auto loans?

Auto loans are secured loans that use the car you buy as collateral. A bad credit auto loan is essentially the same as a normal auto loan but usually with higher interest rates and more expansive acceptance criteria.

You are typically asked to pay a fixed interest rate and make monthly payments for 24 to 84 months, at which point your car will be paid off. Many dealerships offer their own financing, but you can also find auto loans at national banks, local credit unions and online lenders.

When you finance a car it is often a secured loan, which tend to come with lower interest rates than unsecured loan options, like personal loans. According to the automotive finance study for the fourth quarter of 2023 by Experian, the average loan rates by credit score are the following.

Credit score	New cars	Used cars
781 to 850 (super prime)	5.64%	7.66%
661 to 780 (prime)	7.01%	9.73%
601 to 660 (nonprime)	9.60%	14.12%
501 to 600 (subprime)	12.28%	18.89%
300 to 500 (deep subprime)	14.78%	21.55%

Types of lenders that offer bad credit loans

Before agreeing to risky terms offered by buy here, pay here dealers, consider other options for financing your vehicle with poor credit. It is wise to prequalify to more than just one lender to ensure you get the best deal for your circumstances. Along with this, consider the drawbacks and advantages that come with each lender type.

Consider the following bad credit lender options when shopping for your next car.

Online lenders: Shopping online allows you to compare and apply for many different lenders simultaneously. It is also likely that online lenders will offer loan preapproval, which allows you to see your potential rates before you commit to financing. If you prefer the fully online experience, consider a retail and finance combined approach, like Carvana offers.
Banks and credit unions: If you have a relationship with a bank or credit union, it is wise to start there. You will likely save money working with a bank that you have already created trust with. Typically, direct lenders offer assistance either at brick-and-mortar locations or online.
Subprime auto lots: The loans offered through these dealers come from a bank or credit union working with the lot. While these are not always the best rates available, it does offer the convenience of a one-stop shop. If the bad-credit dealer route is right for you, come prepared with competing rates to negotiate the best deal.
Buy-here, pay-here dealerships: Buy-here, pay-here dealerships cater to drivers with subprime credit scores: However, due to the high rates and frequent shady practices, these dealerships should only be considered as a last resort.

Pros and cons of bad credit auto loans

Securing vehicle financing aimed at poor credit borrowers can be an excellent way to get a car but comes with risks. Consider the benefits and drawbacks of a bad credit auto loan.

Pros

On-time payments can improve your credit score
More options for shoppers who might not have access otherwise
Less stringent credit requirements

Cons

Potentially high interest rates
Higher monthly cost
Likelihood of additional fees

What to know before applying for a bad credit auto loan

All borrowers securing an auto loan should shop around with a few lenders before signing, but that step is all the more important with bad credit auto loans. Generally, the worse your credit, the higher the interest rates. When considering a bad credit lender, pay close attention to restrictions to ensure you qualify for the best rates and terms possible.

As a borrower with poor credit, signing off on a longer-term loan to pay less each month can feel tempting. But this is not always the best idea. A longer term will mean more money spent over the entire loan.

Finally, look for lenders that offer prequalification so you can get an idea of possible rates without damaging your credit.

4 tips on how to secure an auto loan with bad credit

It is possible to get a car loan with bad credit, although having bad credit will raise the rates you're offered. If you are having trouble getting approved or finding acceptable rates, try taking these steps:

Make a large down payment. A larger down payment will lower your monthly payment, and it could also help you qualify for better rates because it reduces the amount you have to finance.
Get a co-signer. A co-signer with good credit will take on some responsibility for your loan if you default, but they can also help you qualify for the loan and potentially for a lower rate.
Reduce existing debt. Before applying for an auto loan, pay down as much debt as you can and avoid opening new accounts, like credit cards.
Check your credit report. At least 30 days before you plan on applying, check your credit report. Dispute any inaccurate information to get it removed and boost your score.

If you simply cannot get financing at reasonable rates, leasing a car with bad credit could get you a lower payment. Just remember you won’t own the car at the end.

What to consider when refinancing your car with bad credit

If you are applying for a refinance loan with poor credit, keep the following constraints in mind.

Vehicle mileage: The number of miles clocked on your vehicle's odometer greatly impacts the value of your car. Lenders' constraints can differ by tens of thousands of miles, so check for these types of restrictions.
Age of vehicle: Many lenders will not refinance a vehicle over 10 years old.
Loan amount: Most lenders present minimum loan amounts for refinance loans. Depending on your financial state, factor in the entire cost you will need.

FAQs about bad credit auto loans

The process of improving your credit takes quite a bit of time. But the stronger your credit is, the better rates and terms you will receive. Some ways to work towards increasing your credit score include:
- Keeping track of your credit score.
- Making payments on time.
- Paying down debt.
- Taking advantage of self-reporting.
- Only applying for loans you can truly afford.
- Not applying for too many different kinds of accounts at once.
Applying for a loan with a co-signer who has excellent credit will greatly increase your likelihood of gaining loan approval. The role of a co-signer serves as an extra layer of protection for the lender. The lender gains security because the co-signer is on the hook for payments if the primary borrower can't make them. Because of this, having a co-signer can earn you a decent rate and term, even if you don't have the best credit.
While this answer varies by specific lender, the better your score is, the better your rates and terms will be. If you have low or no credit, you may still qualify for a loan but should expect a steeper APR.

In the fourth quarter of 2023, drivers with scores of 500 or lower received an average rate of 14.78 percent for new and 21.55 percent for used cars, according to Experian. However, these borrowers made up only 0.32 percent of approved loans.

Fortunately, a few lenders are moving away from using credit scores as the sole measure of ability to pay off loans. Instead, lenders are considering factors such as work or education history.
There are still ways to get behind the wheel following an initial denial. Firstly, it is important to take time to improve your credit. Do this by paying down any debt to lower your credit utilization rate. Otherwise, consider getting a co-signer for your auto loan.

How we choose our best bad-credit auto loan lenders

Bankrate's trusted auto loans industry expertise

Read our full methodology

57 years

in business

lenders reviewed

loan features weighed

666

data points collected

The Bankrate team assessed more than 35 auto lenders to find the best. Bankrate considered 18 criteria, such as acceptance criteria, loan amounts and APR range. These scores are broken into four categories.

Loan amounts, repayment options, dealership requirements and state availability all contribute to this category. Lenders that serve customers nationwide with flexible loan amounts rank higher.
This section houses APR ranges, acceptance criteria, fees and discounts. Lenders with the lowest rates, fewer fees and most generous acceptance criteria receive higher scores.
Our team looked at how easy it is for customers to apply for and manage their loans. Criteria include how long you have to shop, customer service hours, whether there’s an app and autopay availability.
This includes prequalification and disclosure of rates and fees. We favored lenders that make it easy for customers to preview possible costs.

Best bad credit auto loan rates for May 2024

How to apply for a bad credit auto loan

How to choose the best bad credit auto loan

On this page

Compare the best bad credit auto loan rates in May 2024

Best bad credit auto loan lenders in 2024

Best for prequalification

Capital One

Pros & Cons

Eligibility & More

Best for shopping multiple offers

Autopay

Pros & Cons

Eligibility & More

Best for fully online experience

Carvana

Pros & Cons

Eligibility & More

Best for bad credit refinance

iLending

Pros & Cons

Eligibility & More

What are bad credit auto loans?

Types of lenders that offer bad credit loans

Pros and cons of bad credit auto loans

Pros

Cons

What to know before applying for a bad credit auto loan

4 tips on how to secure an auto loan with bad credit

What to consider when refinancing your car with bad credit

FAQs about bad credit auto loans

How do I improve my credit?

Will having a co-signer increase my likelihood of approval?

What is the lowest score you can get a car loan with?

What should I do if I get denied a car loan due to poor credit?

How we choose our best bad-credit auto loan lenders

Bankrate's trusted auto loans industry expertise

Availability

Affordability

Customer experience

Transparency