In a Nutshell
Getting a car loan when you have bad credit can be a challenge, but there are some lenders that market specifically to people with lower credit scores. To help guide your shopping, we’ve analyzed some car loans for bad credit. Some of these lenders allow you to apply with a co-applicant or offer features such as interest rate discounts or the ability to apply for prequalification.If you need a new set of wheels but your credit isn’t great, you may be able to get car financing from a lender that specifically markets to people with credit problems.
But car loans for bad credit often come with higher interest rates, so it’s especially important to shop around and compare loan offers. We’ve rounded up some options to consider.
- Good for people who have filed for bankruptcy: Prestige Financial
- Good for a range of refinance options: Autopay
- Good for interest rate discounts: Digital Federal Credit Union
- Good for one-stop shopping: Carvana
- Good for prequalification: Capital One Auto Finance
- Good for people who are unemployed: Credit Acceptance Corp.
- Good for shopping around: MyAutoLoan
- How we picked these lenders
- What to consider with bad credit car loans
- FAQs for car loans with bad credit
Good for people who have filed for bankruptcy: Prestige Financial
Why Prestige Financial stands out: Bankruptcies have a significant negative impact on your credit scores, which may affect your ability to qualify for an auto loan. But Prestige Financial considers applications from people who have filed for bankruptcy. Just keep in mind that if you filed for Chapter 7 bankruptcy, your bankruptcy documents must be available for review on the court website. And if you filed for Chapter 13 bankruptcy, your repayment plan must be approved for your application to be considered.
Here are some more details on Prestige Financial auto loans.
- Interest rate reduction program — Prestige Financial offers an interest rate reduction program for qualified borrowers who make their payments on time. You may be able to reduce your rate by up to 0.5% every three months — up to 2% per year. But it’s worth noting that the lowest your annual percentage rate, or APR, will drop is 14% — which is still high.
- Joint applications allowed — Prestige Financial accepts individual and joint applications. If you apply with a co-borrower who has good credit, it may improve your chances of qualifying or help you get a lower interest rate because the co-borrower shares responsibility for making the monthly payment. Note that Prestige Financial does not allow co-signers, which only have responsibility for the loan if you default.
- Income requirements — You must earn at least $2,250 if you’re submitting an individual application and $2,750 if you’re applying with a co-applicant. Prestige Financial won’t consider self-employment income when determining your ability to repay your loan.
Read our full Prestige Financial auto loans review.
Good for a range of refinance options: Autopay
Why Autopay stands out: Autopay offers a wide range of auto loans, including loans for new and used cars, and multiple refinancing options, including traditional, cash back and lease buyout refinancing.
Here’s some more info about Autopay auto loans.
- Multiple offers — Autopay isn’t a lender. It’s an online marketplace that connects you with auto lenders, giving you an opportunity to receive loan offers from more than one lender.
- Ability to apply for prequalification — If you prequalify for an auto loan, you can check your estimated rates and loan terms without affecting your credit scores. But note that prequalification doesn’t guarantee approval or specific terms. That information will be determined after you submit a formal loan application, if you’re approved, which will also trigger a hard credit inquiry.
- Wide range of loan amounts — Loans through Autopay are available in amounts ranging from $2,500 to $100,000, and loan terms range from 24 to 96 months. (Autopay may offer different terms on Credit Karma.) And remember that while a longer loan term can reduce your monthly payment, you’ll probably end up paying more in interest.
- Additional products — Autopay sells vehicle service contracts and guaranteed asset protection insurance for an extra fee. If your car is stolen or totaled in an accident, gap insurance can help cover the difference between the current value of your vehicle and what you owe on your auto loan.
- Co-applicants — Autopay allows you to apply with a co-applicant.
Read our full Autopay auto loan review.
Good for interest rate discounts: Digital Federal Credit Union
Why Digital Federal Credit Union stands out: Digital Federal Credit Union, or DCU, offers a 0.5% discount for eligible checking account members who maintain electronic payments and a 0.25% discount for energy-efficient vehicle owners.
Here’s some more information about Digital Federal Credit Union’s auto loan offerings.
- Availability — You’ll need to be a Digital Federal Credit Union member to receive financing. Non-DCU members can join a designated nonprofit organization for as low as $10 to become eligible for approval.
- Loan types — DCU offers auto loans for new and used cars (from dealers or private parties), classic/antique cars and mobility vehicles. It also offers lease buyouts and refinancing.
- Same interest rates for new and used cars — DCU offers APRs based on credit history and loan term. Rates are the same for new and used car loans, as well as refinance loans.
- Option to add co-borrowers — Digital Federal Credit Union allows you to apply with a co-borrower.
- Flexible loan terms — DCU offers loan terms of up to 84 months for new and used car purchases and refinance loans. Through Digital Federal Credit Union, you may be able to finance as much as 130% of the vehicles retail value.
Read our full Digital Federal Credit Union auto loan review.
Good for one-stop shopping: Carvana
Why Carvana stands out: Known for its network of vending machines where car buyers can pick up their vehicles, Carvana offers the opportunity to shop for financing and a car in one place.
Here are some more details about Carvana.
- Only one loan type — Carvana only offers loans to finance its in-stock inventory of used cars. If you want a different type of auto loan or don’t want to be restricted to Carvana’s inventory, you’ll need to work with a different lender.
- Ability to apply for prequalification — Carvana offers a prequalification process that allows you to see estimated rates and terms you might qualify for without affecting your credit scores. Carvana’s prequalification offers are good for 30 days.
- Eligibility requirements — Carvana requires applicants to have a minimum income of $5,100 a year and no active bankruptcies.
- Doesn’t accept co-signers — Carvana allows co-signers in certain states. If you want to apply with one, make sure your state is eligible for co-signing with Carvana.
Read our full Carvana financing review.
Good for prequalification: Capital One Auto Finance
Why Capital One Auto Finance stands out: Some lenders don’t offer the ability to prequalify for an auto loan without generating a hard credit inquiry, which can affect your credit scores. But when you apply for prequalification with Capital One Auto Finance, you can check your estimated loan rate and term (assuming you get a prequalification offer) without affecting your scores. You’ll have to submit a full application to see if you’re approved and get your final loan terms.
Here’s some more info about Capital One Auto Finance.
- Loan types — Capital One Auto Finance offers loans for new or used cars from a dealer or for refinancing your existing auto loan from a different lender.
- Loan amounts — The minimum loan amount Capital One Auto Finance offers is $4,000. Your maximum loan amount is determined by your credit history, income and other factors.
- Dealership limitations — Capital One Auto Finance loans must be used at one of the company’s 12,000 participating car dealerships.
- Eligibility requirements — You must be at least 18 years old, live in the contiguous United States and have a minimum monthly income of $1,500 to apply for a loan with Capital One Auto Finance.
- Online car shopping — You can search for cars that fit your needs while also shopping for financing with Capital One Auto Finance’s Auto Navigator tool.
Read our full Capital One Auto Finance review.
Good for people who are unemployed: Credit Acceptance Corp.
Why Credit Acceptance Corp. stands out: Credit Acceptance Corp. specializes in providing auto loans to people who have experienced financial challenges, including those who are receiving unemployment income.
Here are some additional details about Credit Acceptance Corp. loans.
- Loan types — Credit Acceptance Corp. offers financing for new and used vehicles purchased at a participating dealership.
- Availability — Credit Acceptance Corp. is an indirect lender that offers financing through participating dealerships. While these dealerships are located in all 50 states, there’s no guarantee that they’ll be near your home. And be aware that some of these dealerships are buy-here, pay-here dealers. Interest rates with these dealers can be high — the average was 20% in 2018, according to the National Independent Automobile Dealers Association’s 2019 Used Car Industry Report.
- Bankruptcy — Credit Acceptance Corp. considers applications from people who have an open bankruptcy on their credit reports.
Read our full Credit Acceptance Corp auto loans review.
Good for shopping around: MyAutoLoan
Why MyAutoLoan stands out: Comparing auto loan offers from multiple lenders helps ensure you get the lowest rate possible. MyAutoLoan is an online marketplace that matches people looking for auto financing with lenders in its network that meet their needs. You can receive up to four loan offers in just a few minutes.
Here are a few more things to know about MyAutoLoan.
- Loan types — MyAutoLoan offers a wide range of auto loans, including new- and used-car loans as well as private party, lease buyout and refinance loans.
- Bankruptcy — Lenders in the MyAutoLoan network may consider people who have filed for bankruptcy as long as the bankruptcy has been discharged or dismissed.
- Eligibility requirements — Eligibility requirements vary by lender. But in general, you need to be at least 18 years old, have a FICO® score of at least 600 and a minimum income of $21,600 to qualify for a loan ($18,000 for refinance loans).
- Interest rate calculator — MyAutoLoan’s interest rate calculator lets you see your estimated rate based on loan type, loan amount and your credit scores.
Read our MyAutoLoan car loan review.
How we picked these lenders
We selected lenders for this roundup based on factors that could be helpful for people with bad credit. Here are some of the factors we considered.
- Range of auto loans offered
- Ability to apply for prequalification so you can see estimated rates and terms
- Whether co-applicants are allowed, which could help applicants get better loan terms or rates
- Other perks, like rate discounts
What to consider with bad credit car loans
According to an Experian report from November 2023, people with lower credit scores, on average, have interest rates between 13.53% and 21.18% for a used car loan and between 9.29% and 14.17% for a new car loan.
Since people with lower credit scores typically pay higher interest rates, shopping around to find the best deal before you get a new loan is especially important. If it’s possible to postpone your purchase while you build your credit, you may be able to qualify for a lower rate in the future.
But if you really need to buy a car now, there are steps you can take to help increase your odds of approval and lower your cost of financing. You can also consider adding a co-signer to your loan. It may be a good option to improve your chances of getting approved — potentially with better rates too. But not every lender accepts co-signers so make sure to check for this feature while shopping around. If you’re able, having a down payment can also help your chances to be approved because you have less to pay off on the loan.
A personal loan can be another option to finance a car, but beware — personal loans typically have even higher interest rates than auto loans so you may end up paying even more with a personal loan.
If you’re approved for a loan, making your payments on time and reducing your debt can help you establish a positive payment history and improve your credit over time. As you build your credit, you may eventually be able to refinance your auto loan at a lower interest rate.
FAQs for car loans with bad credit
Yes, you can shop around for a car loan, and it’s easy to see multiple offers online. Shopping around can help you find the best rate for your loan, especially since lower credit can mean higher interest rates.
Having a down payment or a co-signer can help you get approved and may also help you get a better rate. If you don’t need a car right away, postponing your purchase and building your credit could save you in the long run. Credit Karma’s Credit Builder could help improve your credit in four days.
First, you’ll need to figure out what you can comfortably afford each month in a car loan payment. Once you have a budget, you can shop around for the best interest rate and terms. You can even get preapproved before you find a car. Once you pick a car, you can finalize the loan and start making payments.