A well-known national bank, Capital One offered the lowest average closed loan APR for borrowers with subprime credit scores on the LendingTree platform. Capital One doesn’t have a minimum credit score requirement, but there is an income requirement of at least $1,500 monthly. 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.
Capital One: Best overall for bad credit auto loans
12 – 84 months
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 seeing a soul. Plus, at $4,000, Carvana also has a lower minimum annual income requirement, making it even more accessible to potential buyers.
Capital One and Carvana offered the lowest average APRs to customers on the LendingTree platform, but there are some limitations. Carvana loans can only be used for Carvana vehicles, and while Capital One loans can be used at a wide variety of dealers, it only offers an online prequalification. New Roads, however, offers preapprovals, a firm offer you can take to a dealer of your choice. New Roads offers loans between $6,000 and $38,000 with terms up to 72 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.
One of several companies offering bad credit auto refinance loans, iLendingDirect has a network of lenders willing to finance cars and trucks, as well as specialty vehicles like motorcycles, RVs and boats. Rates start at 1.99% APR, and a personal consultant will walk you through the process. iLendingDirect is looking for a credit score of 560 or higher from those with car loan balances of $7,500 or more. Available terms range between 24 and 84 months.
iLendingDirect: Best for bad credit auto refinancing
24 – 84 months
$7,500 or more
Increase your chances of getting approved
If you aren’t approved right away, or you’ve been turned down before, you could wait and 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 bad credit 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.
Consider buying a car for 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 are typically less 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 rates could be as high — or higher — than a bad-credit auto loan.