Finding the right car loan for bad credit doesn’t have to be a challenging task. If you find yourself in the difficult position of having questionable credit, but needing more reliable transportation, review our list of top 10 car loans to get you rolling this year. Shopping around can help you find a good rate and make sure that your loan is favorable and compatible with your financial situation.
Don’t forget to compare things such as the approval process, interest rate, loan terms, allowed vehicles, down payments, and repayment plans as part of your decision-making process. No matter what you end up choosing – don’t go it alone. Our comprehensive guide will provide you with the information needed to ensure that all aspects of obtaining a loan are taken into account when making your final decision.
A Quick Overview of Car Loans
|Lender||Est APR(%)||Best For||Loan Amount($)||Min Credit Score|
|Consumer Credit Union||5.49- 17.54||Applying directly to lenders||7500- no max||620|
|My Auto||3.69-21.00||Comparing offers from multiple lenders||8000- 100,000||575|
|Carvana||3.90-27.9||Online purchases & financing||1000-100,000||None|
|Autopay||1.99-17.99||Comparing offers for multiple people||2500-100,000||560|
|Digital Federal Credit Union||3.74-13.24||Applying directly with a lender||2500-500,000||Undisclosed|
|Carmax||2.95-26.00||Online purchasing & financing||500-100,000||None|
|Auto Credit Express||N/A||Finding a bad credit dealer||5000-45,000||400|
|Capital One||Undisclosed||Applying for bad credit||5000-200,000
|RefiJets||3.99-24.99||Small installments over a more extended period||5000-100,000||500|
Best Car Loans for Bad Credit
Car loans for bad credit are defined as loans doled out by lenders to borrowers with a credit score below 600. These car loans are generally unsecured, with annual percentage rates and no security deposits. They are short-term loans that can be returned in less time, from approximately 12 months to 60 months.
The lenders send their transaction and repayment details to Fair Issac Corporation or FICO. This means that it helps you achieve your dream of owning a car and building your credit score. Here are the best 10 car loans for bad credit.
1. Consumer Credit Union
Like all non-profit unions, Consumer Credit Union has an exciting history. The Cooperative Trading Union was initially formed as a protest against exorbitant milk prices. After that, this Union sponsored another union called the Consumer Credit Union to give out loans to ordinary people ignored by the mainstream credit market.
In between that and the collapse of the Corporate Union back in the 1970s, it has been an uphill battle for these car loans from bad credit providers. The Consumer Credit Union has come a long way since battling the great depression, the post-war rebuilding era, and the introduction of student loans in 1966.
As a non-profit, this is one of the best bad credit car loans lenders that give out consumer-centric services. At this financial institution, the borrower is not just a customer but treated as a member, like part of a family. The company provides services like savings accounts, checking accounts, credit cards, and many more. Current loans are available on their official website, and they are the lowest among the bad credit car loans.
- Soft check pre-qualifications are available without affecting your credit score.
- Online applications are accepted. Offices in Illinois and Wisconsin are also open for business.
- Automated payments come with discounts.
- Discounted car buying options are available with discounts.
- Joint applications for a loan are allowed.
- Their membership is required to access loans.
- You must divulge your social security number for pre-qualification.
- Maximum debt to value must be 125%.
- No minimum income is required.
- No banking history is necessary.
- The minimum credit score requirement is 620.
MyAutoLoan was founded by horizon digital finance, which started its operations in 2003. The main focus of this company was to create an ecosystem of an online credit market and other financial services as a direct-to-consumer company. This company doles out loans based on research, the state-of-the-art algorithm, and the implementation of AI to sift through applications in a more efficient and swifter manner. MAutoLoan mainly focuses on lifestyle products, so this is where auto loans for bad credit come in.
MyAutoLoan capitalizes on market trends and uses data-driven technology to cater to the consumer base that seeks information before buying. The company provides different interest rates for cars depending upon usage, such as 2.99% for new cards for over 36 months and provides 3.24% at the same term. After filling out your application, MyAutoLoan enlists up to 4 offers. After that, they match your lender, generating a certificate within 24 hours.
- Multiple options are available for lenders.
- Automated payments are eligible for discounts.
- No origination fee is charged.
- Co-applications are allowed and encouraged.
- The service is only available in some states.
- Customer services are not available on weekends.
- There is no linguistic diversity on the website, especially if you’re a member of the Spanish-speaking community.
- Gross annual income should be above $26,100.
- Bankruptcy restrictions are not a problem.
- A minimum credit score of 575 is required.
Carvana acts as a car loan for bad credit company and an online dealership for buying a car with bad credit. It provides a hundred percent affordable vehicles of a wide variety while sitting at your home and looking at the screen. It has the facility to deliver your ride on your customized date. Carvana also has a car vending office where you can take a car out for a price and then return it if you don’t like it. The payment process starts once you select the car and want to buy it.
The process of buying cars is also reminiscent of an auction house. You can choose from 25,000 cars undergoing extensive quality and safety checking. After you find the vehicle you can afford, you can call dibs on it. The company holds the car for 30 minutes while completing the payment process.
- The minimum loan is lower than most car financing for bad credit.
- Customer service is available 24×7.
- A 100% online application is allowed.
- Customize your repayment date.
- High APR is implemented.
- The service is restricted in Alaska and Hawaii.
- The loan is only available for cars bought from Carvana.
- A minimum annual income of $4000 is required to approve the loan.
- No minimum credit is needed.
- Bankruptcy is not an issue for eligibility.
- The debt-to-income ratio is undisclosed.
Founded in 2007, Autopay is a car loan aggregator that connects you with other lenders that might be suitable for you. The company has an extensive network of 180 lenders that deal with car financing with bad credit. According to their official website, Autopay’s team comes from diverse backgrounds, ranging from software engineers to financial experts and customer relations.
It has a record of serving 700,000 customers and has achieved this goal through consistent growth, optimism, and hard work. They value trust, build customer relationships, and see every problem as an opportunity. Autopay also provides vehicle insurance and protection. Autopay offers options ranging from 2-4, and prequalifications don’t affect your credit score. However, the company also undertakes a hard inquiry of credit if and when necessary. A hard inquiry can reduce your credit score temporarily.
- Provisions for soft check prequalification.
- Multiple options of lenders are available for borrowers to choose from.
- Joint applications are allowed.
- The company undertakes hard credit checks that can affect credit scores.
- The application process can take two days.
- The funding can take 1-2 weeks to get transferred.
- The minimum credit score has to be 560.
- The maximum income-to-debt ratio should be 50%.
- Bankruptcy is not an issue.
- Annual income varies by lenders.
5. Digital Federal Credit Union
Digital Federal Credit Union, also known as DFCU, is a non-profit credit union. It functions like a consumer credit union created by members to provide loans for low interest and longer terms. Chartered in October 1979, DFCU serves over 1 million families and has dealt with 700 companies. DCU provides a range of financial services. From banking services like checking, savings accounts, equity, and mortgages to business services like credit cards, debit cards, and car loans for bad credit, etc.
DCU has two types of applications for auto loans for bad credit: auto purchase loans and auto refinancing loans. An auto purchase loan has an interest rate of 5.24% with a loan term of 36 months. The interest rates increase as the term increases, with a maximum of 7.74% and a term limit of 84 months. The interest rates also differ between old and new cars, and special offers are allotted for people who buy energy-efficient cars such as electric ones. DCU is one of the credit unions that provide loans up to 130% of the price of vehicles. Auto refinancing loans work the same way.
- Lowest interest loan of 5.24%.
- Different loan options for new and old cars, including car loans for bad credit.
- Interest borrowing can be up to 130% of book value.
- Completely online application process.
- Readily available customer service.
- Swift transfer of funds within a day.
- Membership requirement is necessary.
- An online application can result in a hard credit inquiry.
- Social security number is required in the application.
- The minimum credit requirement is undisclosed.
- There is no requirement for disclosing annual income.
- The maximum debt-to-credit ratio is 60%.
- Membership is necessary.
6. CarMax Loans
CarMax markets itself as a company that gives car loans for bad credit in a way that always prioritizes innovation while running a business. They are considered a disruptor and are revolutionizing the automotive lending industry with their dedicated associates and diligent customer service. They follow a “No-Hassle” policy for their application procedure. CarMax has successfully created an environment where customers have the power to choose cars at their convenience and terms.
CarMax prides itself on its transparency and effective communication through customer service. Their main purpose is to maintain clarity with the customer and build trust. CarMax works with third-party lenders to offer customers suitable options. The company has a minimum credit score requirement of 630, which makes it easy for people with fair credit to access their auto loans.
- Application offers can be 100%.
- There is a provision for a three-day loan window.
- People with low to fair credit can get loans.
- The APR is high.
- The loan applies to cars sold through this company.
- A minimum credit score of 630 is required.
- No credit history requirement is necessary.
- The minimum income requirement depends upon the lender it matches.
- Bankruptcy holds no bar.
7. Auto Credit Express
Auto Credit Express is a third-party lending platform that connects borrowers to suitable lenders but doesn’t give loans themselves. One of its biggest strengths is that it provides borrowers with multiple choices and alternatives. This place might be for you if you need car financing for bad credit. Auto Credit Express works by helping customers new to credit, building it, and improving the damaged and lousy credit of existing customers.
Auto Credit Express has partnerships with over 1500 dealerships across US and Canada. They offer facilities like offering fast-approval subprime mortgages. Regardless of your credit history, ACE provides for auto-financing throughout the years. ACE also provides credit facilities for people with a history of bankruptcy. Auto loans can be the best way to rebuild your credit if you’re going through financial hardship. ACE will be appropriate if you are searching for bad credit car dealerships.
- Multiple options for borrowers are available.
- They have partnerships with over 1500 borrowers.
- Eligibility is not hampered due to a record of a previous bankruptcy.
- They also provide auto loans for older cars.
- Some lenders might do hard credit checks.
- Social security number has to be provided.
- 400 minimum credit score is needed.
- No credit history is required.
- The minimum income should be $1500 per month.
- Services are available in all states except Puerto Rico.
8. Capital One
Capital One is one of the few companies to be environmentally conscious. It is a company where you may get a benefit if you’re taking car loans for bad credit. It believes that no one should be left out of the financial system or overlooked by the credit market. So, it helps in building an inclusive environment for all types of lenders and debtors. Capital One educates its customers about the financial world and the credit market.
You have multiple car options on its website and the loans are offered accordingly. You can personalize your pay rates and loan terms. They provide a comprehensive credit management system and finances before visiting a dealership.
- Multiple options for buyers.
- A soft credit check is available.
- Pre Qualifications are valid for 30 days.
- Options are limited.
- APR is variable and undisclosed.
- A 300 credit score is required.
- APR is undisclosed.
- Annual income is undisclosed.
9. RefiJet Loans
For car loans for bad credit, RefiJet is the best option for you. RefiJet is one of the leading auto lenders in the country, which uses state-of-the-art technology to process applications and determine whether you are qualified for a loan. Once the application for the loan is submitted, the system algorithm compares different lenders with different parameters. The bad credit car loans parameters are then matched with the lenders’ requirements and are displayed on the screen.
The borrower will then have to choose between the lender options. Once that’s done, the document information is sent to the lender without filling out your form multiple times. In this manner, RefiJet saves money and time. RefiJet also takes the privacy and data protection of customers seriously. With stringent employee background checks, the company also has an encrypted password protection protocol.
RefiJet has networked with financial institutions with national and international reach. The company is renowned for its facility to wavier off the first monthly payment if you’re a returning customer. Plus, the company generally makes deals that save money on monthly payments.
- Prequalification is not available for this loan.
- Two months’ payment is waived off.
- A Spanish version of the website is available.
- Potentially, you will be charged multiple fees.
- The entire application process is not online.
- The minimum credit score is 500.
- The income-to-debt ratio is 70%.
- A verifiable source of income is required.
- A clean credit record is necessary.
- A valid driver’s license is needed.
- The car can not be more than 10 years old.
Founded in 1994, Car.Loan.com has been helping customers with bad credit car loans or anyone with credit issues. They believe in the core principle that people with less-than-perfect credit scores should get a fair opportunity for auto loans for bad credit. Part of Car.Loan.com’s core strength is that they do away with the hassle of the application process and the prequalification process, which becomes a bane in the customers’ lives while applying for loans.
Fast approval is also one of their key attractions. If you’re buying a car with bad credit, car.loan.com does everything possible to get your vehicle and get funding in your account. Car.Loan.com has a loan calculator on their website where you can estimate how much loan you can get. You must mention your credit score, monthly income, and other expenses like rent and mortgages. Car.Loan.com. makes provision for all those who have a 620 credit score. These lenders go beyond your credit history and provide credit on multiple parameters.
- Fast approval of credit funding.
- Credit is available for a 620 credit score or below, an advantage for people looking for auto loans for bad credit.
- Credit is also approved for people undergoing bankruptcy.
- APR is high.
- The credit is limited to a few types of car loans.
- A minimum credit score is 500.
- The minimum monthly income ranges from $1000 to $2000.
- Identity proof is required.
- Residential proof is also required.
Auto Loans for Bad Credit– What is it?
Car loans for bad credit are defined as loans given to borrowers with a credit score below 600. These car loans are generally unsecured, with annual percentage rates and no security deposits. They are short-term loans that can be returned in less time, ranging from approximately 12 months to 60 months.
The lenders send their transaction and repayment details to Fair Isaac Corporation or FICO. Auto loans are generally considered long-term loans with a longer-term limit and low-interest rates. However, bad credit for an auto loan is a high-risk loan. The company you are applying to for a loan can charge high-interest rates and provide a shorter time but can offer less processing fees and faster release of funds during urgency. Banks do provide extensive benefits during car financing for bad credit. However, the process is tedious, and the waiting lines are long. The application process also is lengthy. Lenders that provide legitimate no denial payday loan lenders make it hassle-free and approve the funds swiftly.
Working of Bad Credit Auto Loans
If you ask questions about car dealerships that work with bad credit near me, the above options would be more than enough to get your car on the street. However, you will need to know how it works. Once you approach a lender for the loan, the lender will check your credit score, banking history, and previous loans to determine whether you’re eligible for the loan. Here are some tips:
If you are curious about bad credit car dealerships near me, remember this tip.
Make the down payment as high or large as possible. If the interest rates are high and the loan period is low, you might have to pay back more than you borrowed, which can easily become a burden.
If your credit score is less than ideal, then make sure you get a co-signer. Co-signers with higher credit scores and impeccable banking histories can easily help you get approval. If you are searching for bad credit car loans, this is one point you have to remember.
Reducing Pre-existing Debt
If I were searching for bad credit car dealers near me, this point is crucial. Not all lenders will be able to consolidate your debts. It will also affect your credit score massively. So, reduce your previous debt.
Credit Report Monitoring
Monitoring your credit is essential and benefits your transactions in the long run. If personal loans for bad credit are what you were looking for, then checking your credit score is essential.
Types of Car Loan Lenders
Car loans for bad credit are defined as loans disbursed by lenders to people whose credit score is below 600. These loans are generally unsecured, with annual percentage rates and zero security deposits. They are short-term loans, which can be returned in less time, from approximately 12 months to 60 months. The lenders send their transaction and repayment details to Fair Isaac Corporation or FICO.
But not all lenders are the same. Here are some types:
1. Credit Unions
Credit Unions are conglomerates of working unions working together to offer loans and credit to ordinary consumers with damaged credit or consumers new to credit. They are direct lenders who spend their money to give loans at varying rates.
2. Online Lending Platforms
They are online platforms where the consumer can connect with different lenders with different criteria and requirements. You can choose between them, whichever you find suitable for you.
3. Online Car Dealerships
Online car dealerships often offer car loans for bad credit. For your convenience, online retailers allow you to choose installment options between different lenders.
Approval for Car Loans for Bad Credit
Car loans for bad credit vary from company to company. Bad credit car loans send their transaction and repayment details to FICO. Auto loans are generally considered long-term loans with a longer-term limit and low-interest rates. However, bad credit for an auto loan is a high-risk loan. The company you are applying to for a loan can charge high-interest rates and provide a shorter time but can offer less processing fees and faster release of funds during urgency. Banks do provide extensive benefits during car financing for bad credit. However, the process is tedious, and the waiting lines are long. The application process also is lengthy. Lenders that provide bad credit auto loans make it hassle-free and approve the funds swiftly.
Generally, these companies take a day or two to get funds. Companies like RefiJet take these criteria seriously. RefiJet is one of the leading auto lenders in the country, which uses state-of-the-art technology to process applications and determine whether you are qualified for a loan. Once the application for the loan is submitted, the system algorithm compares different lenders with different parameters. The loan parameters are then matched with the lenders’ requirements and are displayed on the screen.
The borrower will then have to choose between the lender options. Once that’s done, the document information is sent to the lender without filling out your form multiple times. In this manner, RefiJet saves money and time. CarLoans also get you lending rapidly as well. Fast approval is also one of their key attractions. If you’re buying a car with bad credit, Car.Loan.com does everything possible to get your vehicle and get your funding in your account.
Loan with a Lender Or a Dealer: Which One’s Better?
Buying a car with bad credit from a lender can have advantages. Lenders offer you loans based on your credit score, credit history, and banking history and on how well your previous debt is consolidated. Also, once the loans are approved, you can buy any car you want without any restrictions. Some lenders, such as Capital One, incentivize people to take out loans for electric cars, which leave fewer carbon footprints.
Well, Capital One is the one company where you can get a benefit if you’re taking out car loans for bad credit. But also have their disadvantages as well. The car loans doled for lousy credit are high-risk loans that can charge you high annual percentage rates. That can get burdensome for some people.
A car dealership makes contact with reputed financial institutions. They offer you multiple alternatives, and you can choose from wherever you feel you will benefit. You can choose lenders that offer you lower interest rates and longer-term limits. However, the offers are limited to the range of cars they sell at their dealership. You cannot use these loan offers anywhere in the market or with any other dealership.
Bad Credit Auto Loan Interest Rates
Different auto lending companies provide different annual percentage rates for different credit card loans. For car financing for bad credit, the consumer credit union offers APR ranging from 5.49-17.54%. The Consumer Credit Union has come a long way since battling the great depression, the post-war rebuilding era, and the introduction of student loans in 1966. As a non-profit, this is one of the best lenders to dole out consumer-centric services. The company provides services like savings accounts, checking accounts, credit cards, and many more. Current loans are available on their official website, and they are the lowest among the bad credit car loans.
MyAutoLoan has an APR ranging from 3.69-21%. AutoLoans mainly focuses on lifestyle products, so this is where auto loans for bad credit come in. My Auto Loan capitalizes on market trends and uses data-driven technology to cater to the consumer base that seeks information before buying. The company provides different interest rates for cars depending upon usage, such as 2.99% for new cards for over 36 months and provides 3.24% at the same term.
It has the same range of APR as MyAutoLoan. It provides a facility to deliver your ride on your customized date. Well, It also has a car vending office where you can take a car out for a price and then return it if you don’t like it. The payment process starts once you like the car and want to buy it.
Cheaper Car Loan Interest Rates for Bad Credit
Car loans for bad credit offer lower ranges of APR. For example, Consumer Credit Union offers a lower range of 5.49% of APR. Meanwhile, MyAutoLoans charges a lower range of 3.69%. Digital Federal Credit unit provides a lower range of 3.74%. DCU provides a range of financial services, from banking services like checking and saving accounts to equity and mortgages. The credit union also provides business services like credit, debit cards, and other loans, especially car loans for bad credit.
But these rates aren’t for everyone. For that, you need to fulfill some criteria. You need to keep a healthy credit score. Your credit history must be impeccable. Ensure your previous debt is relieved or consolidated and your banking history is clean. Only then will the lender provide you with lower interest rates.
Tips for Getting Better Car Loans with Bad Credit
As mentioned in the article, lower ranges of APR are provided when fulfilling specific criteria. Here’s how you can use your car loans to your benefit.
- If you were asking questions about car loans for bad credit, remember this tip. Make as many high or large down payments as possible. The interest rates are high, and the loan period is low, so you might have to pay more than you borrow. That might become a burden.
- If your credit score is less than ideal, make sure you get a co-signer. Co-signers with higher credit scores and impeccable banking histories can quickly help you get approval. If you are searching for bad credit car loans, this is one point you have to remember.
- This point is crucial if I were searching for auto loans for bad credit. Not all lenders will be able to consolidate your debts. It will also affect your credit score massively. So, reduce your previous debt.
- Monitoring your credit is essential and benefits your transactions in the long run. If bad credit auto loans are what you were looking for, then checking your credit score is essential.
1. What is the lowest credit score for a car loan?
The lowest credit score for a car loan with bad credit is about 300. It doesn’t do any credit checks. Digital Federal Loans have their credit score under wraps and undisclosed to the consumer until they apply for a loan.
2. What car companies help with bad credit?
MyAutoLoans, Carvana, and Digital Federal Union help rebuild credit and offer the opportunity to buy an automobile. They offer loans on credit 500 and below.
3. What is the average interest rate for a car loan with bad credit?
The average lower range of APR is about 4%. The average higher range is about 37%. The lower interest rates are offered when your credit score fulfills the criteria.
4. How much down payment for a car with bad credit?
It is advisable that the borrower pay at least half the principal amount as a down payment. That way, the interest payment won’t be substantial.
Everybody deserves a second chance, and so does anyone with bad credit. The person with bad credit should also be allowed to build back their credit and buy any consumer goods such as a car. In that regard, car loans for bad credit are provided for these people with less-than-perfect scores to get credit. But these loans can get predatory with high-interest rates. They can become burdensome. So before applying, read the terms and conditions.