Here are our five top lenders that offer auto loans with bad credit. Bad credit isn’t necessarily a deal-breaker if you’re in the market for a new or used vehicle. While making bad financial choices in the past may once have limited your options, today many lenders are willing to provide guaranteed auto loans to borrowers with less than desirable credit scores.
While you can still qualify for an auto loan if your credit is damaged, don’t expect to see the great rates that lenders advertise. Higher interest rates will reward a lender for taking a risk on a questionable borrower with a spotty credit history. But your bad credit won’t, in most cases, prevent you from buying a vehicle.
Why Lenders Take a Chance on Auto Loans
Unlike personal loans, which may be used for non-tangible purchases like education, travel, or paying off debt, car loans have a valuable asset that can serve as collateral. If you fail to pay back your loan, lenders can seize the vehicle and sell it to recover their money. This means it’s easier to get auto loans with bad credit than other type of loan.
Also, many lenders recognize that personal transportation is a necessary expense for school or work. You’re more likely to make payments on your auto loan than your other expenses so you don’t lose your ability to get where you need to go. For these reasons, banks and financial institutions are more willing to extend credit to you, even if you have a poor history.
Top 5 Providers Offering Auto Loans with Bad Credit
Even if you have bad credit, you don’t want to give your business to a shady or untrustworthy loan provider. You want a professional, established lender who gives great service and can help you through all the stages of applying for a loan, getting approved, and getting funding. You also want the best possible rate you can get. Here are five great options for auto loans with bad credit.
1. Auto Credit Express
Specifically aimed to offer auto loans with bad credit, Auto Credit Express works with many lenders and dealerships to find the best option for your needs. The company has made more than $1 billion in loans since they started in 1999. They promote an easy pre-qualification process that can be done in just a couple of minutes using an online form. You’ll hear back from a local dealer who can offer you financing.
- Rates: Vary depending on the lender but typically range between 3.99% and 24.99%.
- Minimum Loan Amount: None.
- Requirements: You must earn at least $1,500/month to qualify.
- Vehicle Restrictions: None.
MyAutoLoan.com is a more conventional network of lenders who are vying for your attention. That does not mean you can’t get auto loans with bad credit through them. You’ll apply and quickly hear from up to four lenders who are willing to work with you to finance a new or used vehicle. Everything is done online with the goal of fast financing. Most lenders permit co-signers, and you can choose from terms of between 24 and 84 months.
- Rates: Vary depending on the lender but range between 2.74% and 27%.
- Minimum Loan Amount: $8,000.
- Requirements: You must have a credit score of at least 500 and a monthly income of $1,800.
- Vehicle Restrictions: Less than ten years old and no more than 125,000 miles for refinancing.
3. Blue Sky Auto Loans
Like MyAutoLoan.com, Blue Sky gets offers from multiple lenders and presents them to you. They specialize in helping people with bad credit get loans, but the lenders they work with don’t offer particularly good rates and may assign additional fees to your loan. However, Blue Sky is a good choice if you need a loan with no money down and are looking for terms between 24 and 72 months. The company also offers auto refinancing loans.
- Rates: Vary depending on the lender but could be up to 29%.
- Minimum Loan Amount: $7,500.
- Requirements: You must have a credit score of at least 550 and a monthly income of $1,800.
- Vehicle Restrictions: Less than eight years and 100,000 miles for refinancing.
CarFinance.com works more like a traditional lender, and they offer loans directly to you. You can get pre-approval from CarFinance.com before you have a vehicle picked out. They say that the most important factors in qualifying are your history of payment on your existing car loan and your debt to income ratio. Loan terms are from 36 to 72 months.
- Rates: Range from 7.99% to 21.9%.
- Minimum Loan Amount: $7,500.
- Requirements: You must have a credit score of at least 525; there is no minimum income requirement.
- Vehicle Restrictions: Less than eight years and 100,000 miles. Only passenger cars and some light trucks are eligible, and some brands are excluded. Also, you can’t get an electric vehicle.
5. Capital One
Capital One is a big bank that works with a range of borrowers, including people who have credit scores as low as 500. This could be an easy choice to get auto loans with bad credit. They require you to use their Auto Navigator online tool to find a dealership that you’ll work with, and you’ll fill out your loan application at the dealer rather than on your own. The dealer will do a “hard pull” of your credit report, so you’ll need to be prepared to see your score dip a few points.
- Rates: As low as 3.59% and up to 24.99%. Typical “bad credit” borrowers pay 8.2% for new cars and 11.2% for used cars.
- Minimum Loan Amount: $4,000.
- Requirements: You must have a credit score above 500 and a monthly income above $1,500.
- Vehicle Restrictions: They must be years or newer, and some models are excluded.
How To Evaluate Loan Offers
Getting auto loans with bad credit can be even more complex. Interest rates are obscured — because they’re often high — and monthly payments spread out over a 5- to 6-year term are emphasized to seem affordable. Remember to look at the total amount you will pay over the life of the loan instead of the monthly payment, and choose the shortest loan terms you can manage.