A well-known national bank, Capital One auto loans had the lowest average closed loan APR for borrowers with subprime credit scores. It doesn’t specify a minimum credit score requirement, but Capital One does require monthly income of at least $1,500. You could get prequalified online at Capital One before going to the dealership so you’ll have an idea of the terms you qualify for, though you won’t know your exact rate or terms until you apply.
While OpenRoad specializes in auto refinance, it offered one of the lowest average APRs in 2022 for bad-credit purchase loans on the LendingTree platform. This lending platform works with borrowers who have FICO scores as low as 460. It has new and used car loans available for a wide variety of terms and one of the lowest starting APRs. You may not have to make a down payment, as OpenRoad allows up to 120% financing (and up to 175% in some cases, depending on credit).
While Capital One offered the lowest average APRs to customers on the LendingTree platform, it only offers an online prequalification. New Roads, however, offers preapproval, a firm offer you can take to a dealer of your choice. New Roads offers loans between 36 and 84 months and also considers borrowers with bad credit or no credit, as well as those with past bankruptcies. It offers loans in 30 states — see the full list here.
You can’t use a Carvana auto loan for just any car — it can only be used on the e-commerce platform. But if you’re in the market for a used vehicle and credit is a concern, Carvana considers all types of credit and puts the whole car buying process online. You could shop, buy, finance, trade in your old car and schedule delivery of your new ride, all without speaking to a salesperson. Carvana also allows borrowers to add a cosigner to their auto loans.
If you aren’t approved right away or you’ve been turned down before, it could be worth waiting to apply for a loan while you work to improve your credit. But if you need a car loan now, consider these options.
Find a cosigner. Ask someone you trust — and who trusts you — who has good credit to cosign the auto loan for you. By cosigning, they agree to pay back the loan if you default or else take a big hit to their credit score. You may qualify for a lower rate by using a cosigner because lenders may see the loan as less of a risk.
Consider buying a car with cash. Used cars are less expensive than new ones, and you may be able to buy one for the same amount you’d put down on a new car. Plus, paying cash means a credit check is unnecessary. Read more about when it makes sense to buy a car with cash.
Buy from a private seller, not a dealer. Used cars sold by private sellers typically cost less than those sold by dealers and can be financed with cash or a private party auto loan.
Use a personal loan. Some personal loans don’t require strong credit and may be used to purchase a car. But be careful: rates could be as high as — or higher than — a bad-credit auto loan.
