With the average cost of a new vehicle hovering around $47,000, it makes sense why many people would choose to finance a car and pay off the loan over time.
Even used cars can cost upwards of $20,000 depending on the make and model. If you need to finance a car but don’t have good credit, this can put you in a tough situation. Usually, the best financing terms are rates are reserved for borrowers with above-average credit.
In some cases, companies claiming to offer bad credit auto financing sell low-quality cars and offer unfair terms to take advantage of people’s situation. This is why fact-checking and doing thorough research is important.
Fortunately, we’ve done a lot of this work for you by narrowing down some of the most credible and fair companies to choose from.
Here are 5 suitable options to consider if you’re looking to finance a car with bad credit.
Auto Credit Express
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Loan Amount$20,000 – $45,000
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APR3.99% – 29.99%
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Loan TermVaries
Features & Benefits
- Minimum Credit Score: 400
- Helps car buyers who have low credit scores, bankruptcies, or repossessions.
- Allows cosigners
Auto Credit Express has been issuing bad credit auto loans since 1999. They work with a network of dealer partners to help you find an auto loan quickly. You can find auto financing even if you’ve filed for bankruptcy in the past or have no credit history.
To qualify, you must have a full-time job and earn at least $1,500 per month. You can submit a prequalification form online in as little as 30 seconds. Same day approval is available for a loan.
Keep in mind that Auto Credit Express will match you with a local lender after shopping around to help you find the best financing deal. They also won’t work with any private sellers, so you must consider financing a car from a dealer or legitimate car lot.
Carvana
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Loan Amount1,000 – $100,000
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APR3.90 – 27.90%
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Loan TermVaries
Features & Benefits
- Minimum Credit Score: 450
- Application process 100% online
- Get pre-qualified with a soft credit check
Carvana saves you time by allowing you to get preapproved for financing before you even start searching for a vehicle. It takes just 2 minutes to get preapproved on their site, and this has no effect on your credit.
While there is no minimum credit score to qualify you for a loan, you must choose a vehicle from Carvana’s inventory. Once you receive your financing rate from Carvana, it’s good for 45 days.
Car.Loan.com
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Loan Amount$7,500 – $45,000
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APR3.0 – 25.00%
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Loan Term36 – 72 months
Features & Benefits
- Help individuals with little to no credit
- No monthly income requirements
- Get approved in less than 30 minutes
Car.Loan.com offers fast and easy approvals if you’re looking to finance a car with bad credit. They’ve teamed up with the nation’s largest network of auto dealers who are trained in special finance.
The online application only takes 3 minutes to complete and same-day approval is available. There is no minimum credit score requirement. However, each lender has their own requirements, so your dealer options may vary.
Still, this is a solid option to consider since Car.Loan.com is geared toward borrowers with bad credit or no credit history.
myAutoloan
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Loan Amount$8,000 – $100,000
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APR3.69 – 21.00%
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Loan Term24 – 72 months
Features & Benefits
- Minimum Credit Score: 575
- Up to 4 lender matches with a soft credit check
- Get approved within as little as 30 seconds
MyAutoLoan.com offers bad credit auto loans for both used and new vehicles. This online lending network connects you with local dealers so you can get offers quickly.
They also have a free interest-rate estimate feature so you can get a clear view of what your interest rate might be given your current credit score.
Applying to finance a car with bad credit on the site is easy. Just select the type of loan you’re looking for, then complete a quick and secure online application. It generally takes less than a few minutes to receive a decision and compare offers for an auto loan.
Capital One Auto Finance
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Loan Amount$4,000 – $40,000
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APRVaries
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Loan TermVaries
Features & Benefits
- Minimum Credit Score: 500
- No origination fee
- Get pre-qualified with a soft credit check
Some major banks offer auto financing options for borrowers with bad credit as well. Capital One has an auto loan program where the minimum credit score to apply 500.
You must also have a minimum monthly income of $1,500 to $1,800. The car you choose to finance must have fewer than 120,000 miles and the model should be no older than 10 years.
Capital One allows you to prequalify for a loan on their site, but keep in mind that a prequalification doesn’t automatically mean you’re approved. You must still submit a loan application to see how much you can get approved for and what your interest rate will be.
FAQ
Is it harder to get an auto loan with a credit score of 500?
A credit score of 550 or lower is often considered subprime, as well as a risk to lenders. While a traditional lender may not qualify you for a car loan, the key is to go to someone who will work with your bad credit. Lending networks that specialize in working with bad credit will already have dealers and lenders on hand that are willing to give you a loan.
Why are online lending networks a good option for auto loans when you have bad credit?
Online lending networks are actually a good option for anyone who’s looking for an auto loan, regardless of your credit score. Lending networks like the ones mentioned above allow you to compare tons of dealer options all in one place. Plus, prequalifying and applying for financing online saves you time while helping you get loan funding faster.
Do I need to make a down payment or trade-in a vehicle to get an auto loan with bad credit?
Not necessarily. While trading in a vehicle can help lower the cost of your loan, but it’s not required. Most dealers will require you to make a down payment, even if it’s small ($200 – $500). However, Auto Credit Express states on their website that you may be able to qualify for a loan with $0 down.
Do I need a cosigner?
No, you don’t always need a cosigner to finance a car with bad credit. While a cosigner could help you qualify for a loan with a traditional financial institution or lender, it also makes the cosigner responsible for the repayment of the loan. If you don’t have a friend or family to cosign for you, consider trying the financing options mentioned in this article.
Summary
Having bad credit doesn’t mean you can’t get a car loan. It just means you have to look in different places. Realize that you probably won’t qualify for the best interest rates, but using one of the options we recommend can help you secure financing quickly.
You can also use these financing options as an opportunity to improve your credit by making on-time payments. In the future, you can consider refinancing to get a lower interest rate.
