Are you looking to buy a new or used car but worried about qualifying for an auto loan due to your bad credit? Don’t worry, there are still lenders out there who are willing to work with you. In this article, we will explore some of the best bad credit auto loan companies in January 2024, along with the rates and repayment terms they offer.
Best Bad Credit Auto Loan Companies Compared 2024
Here is a comparison of some top lenders for bad-credit borrowers:
| Lender | Min. Credit Score | Loan Amount | Term | Other Benefits |
|---|---|---|---|---|
| Auto Credit Express Auto Loan | No minimum | From $8,000 ($5,000 for refinance) and up, with no set maximum | Depends on the vehicle purchased | No minimum if you complete Credit Smart program |
| Carvana Auto Loan | No minimum | Depends on the vehicle purchased | 36, 48, 60, or 72 months | Refinancing through Carvana is not an option |
| Carmax Auto Loan | No minimum | Up to $100,000 | 36, 48, 60, or 72 months | – |
| Consumers Credit Union Auto Loan | No minimum if you complete Credit Smart program | $1,000 to $100,000 | – | Competitive rates and terms as long as 96 months |
| MyAutoLoan | – | From $8,000 ($5,000 for refinance) and up, with no set maximum | – | Up to four loan offers through partner lenders |
| AutoPay Auto Loan | Varies by lender | $2,500 to $100,000 | – | Loan terms range from 24 to 96 months |
| Drivetime Auto Loan | No minimum | Depends on the vehicle purchased | – | No haggle pricing model, only available for Drivetime vehicles |
Our Recommendations for Best Auto Loan Companies for Bad Credit
Auto Credit Express Auto Loan
As long as you are employed full time (or have a fixed income), earn at least $1,500 per month, and can show proof of residency, you can likely get approved for an auto loan through Auto Credit Express. Even borrowers with bankruptcies can get approved, and you’re able to submit a loan request online in just a few minutes.
Carvana Auto Loan
Carvana is an online car-buying service that delivers your vehicle to you or offers the option of picking up your car from an automated vending machine. In-house financing is available to borrowers, even those with bad credit, with repayment terms up to 72 months.
Carmax Auto Loan
Known for its nationwide used-car dealerships, CarMax may be an option if you’re interested in buying a vehicle and financing at the same time. Most buyers can get approved online in as little as five minutes, even with poor or bad credit.
Consumers Credit Union Auto Loan
If you’re struggling to get approved for an auto loan, Consumers Credit Union offers guaranteed loan approval to member borrowers who complete its eight-month secured loan Credit Smart program. Auto loans are only available for new or used cars seven years old or newer, but competitive rates and terms as long as 96 months are offered.
MyAutoLoan
Borrowers with credit scores as low as 600 may be able to find an auto loan for a new or used vehicle, or even refinance an existing vehicle, through MyAutoLoan. This platform gives you up to four loan offers through partner lenders with a range of eligibility criteria and terms.
AutoPay Auto Loan
AutoPay is another lender platform that connects borrowers with new car, used car, and refinance loans from $2,500 all the way up to $100,000. Loan terms range from 24 to 96 months with competitive interest rates.
Drivetime Auto Loan
If you have bad credit and are looking to buy a car, Drivetime offers an alternative to the Buy Here, Pay Here model. Borrowers are able to get approved online with no impact to their credit, and even borrowers with prior bankruptcies or those with no credit history can be approved.
Methodology
To determine the best bad credit auto loans and lenders, we considered factors such as loan amounts, whether new or used vehicles can be financed, loan terms, borrower criteria, interest rates, and availability. We selected lenders who specialize in working with bad-credit borrowers and provide competitive rates and terms.
How to Select the Best Auto Loan for Bad-Credit Lender
Choosing the best auto loan from a bad-credit lender is similar to picking any other auto loan. Here are some tips:
Shop around for the best rates
Before accepting any loan offer, shop around with multiple lenders to compare rates. Many lenders offer preapproval online, allowing you to rate-shop without impacting your credit score. You can also check loan offers available through the dealership.
Choose the loan terms that work for your budget
Find an auto loan with terms that suit your budget and repayment capacity. Consider both interest rates and repayment duration, as you’ll be paying off the vehicle for several years.
Types of Lenders That Offer Car Loans for Bad Credit
Various lenders offer car loans for bad credit, including banks, credit unions, lending institutions, online car sales companies, and dealerships. Dealerships may offer their own financing or work with partner lenders. Some dealerships also offer in-house financing known as “buy here, pay here” (BHPH) loans.
What You Should Know When Applying for a Bad-Credit Auto Loan
Having bad credit doesn’t mean you can’t get an auto loan, but it’s important to understand a few things:
- You may not be able to buy the vehicle you want.
- Your repayment options will be limited.
- You’ll likely pay more in interest and additional fees.
How to Increase Your Chances of Getting Approved for a Bad-Credit Car Loan
If you have bad credit, here are some tips to increase your chances of approval and get the best deal:
- Consider buying a used car instead of a new one.
- Find a vehicle with a good deal and equity.
- Add a cosigner to your loan.
- Shop around with different lenders.
- Check with your bank or credit union.
- Explore BHPH dealerships.
Remember, having bad credit doesn’t mean you can’t get an auto loan. Take the time to research and compare lenders to find the best option for you.
Bad credit doesn’t preclude you from getting a car loan, and finding a lender that specializes in working with bad-credit borrowers can help you finance the vehicle you need while rebuilding your credit.
Frequently Asked Questions (FAQs)
Q: What is a bad-credit car loan?
A: A bad-credit car loan is funding used by borrowers with fair, poor, or bad credit to purchase a new or used vehicle. These loans often have higher interest rates and more limited repayment terms compared to typical auto loans.
Q: How do you buy a car with bad credit and no cosigner?
A: You can still buy a car with bad credit by finding a bad-credit lender. These lenders specialize in working with borrowers with lower credit scores and may offer credit-building programs, higher-interest loans, and more limited repayment terms. Another option is buying through a BHPH dealership, which may waive credit checks and down payment requirements.
Q: What’s the lowest credit score you can have to finance a car?
A: There is no minimum credit score required to finance or refinance a car. Requirements vary among lenders. Many lenders are willing to offer loans to borrowers with fair credit, poor credit, bad credit, or even no credit.
Q: Is it better to get an auto loan from your bank or the dealership?
A: It’s often better to get preapproved for an auto loan from your bank and then compare the offers available through the dealership. Your bank may consider your existing relationship and offer competitive loan terms. However, the dealership may be able to match or beat those terms through partner lenders to gain your business.