Best Bad Credit Car Loans and Auto Lenders (May 2024) (2024)

From our extensive research, we found the best car loans for bad credit are offered by myAutoloan, Ally, AutoPay, Prestige Financial, Capital One, Carvana, Carmax, Credit Acceptance Corp, and New Roads. Each company offers low minimums for both income and credit score as well as affordable rates for purchase loans and auto refinancing with bad credit.

Compare Bad Credit Auto Loan Companies

The table below breaks down the companies with the best auto loans for bad credit. To make for an easy comparison, we’ve highlighted each lender’s minimum-required credit scores and annual incomes for prospective recipients. You’ll also find whether these lenders offer car loan pre-approval:

From our list of nine providers, we narrowed down the top three subprime auto lenders. While we recommend these lenders, it is best to compare multiple auto loan providers to find the best deal.

To help you begin comparing, we’ll break down our picks for best bad-credit car loan providers in the sections below. We’ll also cover their loan details and customer reviews.

myAutoloan

Starting APR: 6.99% for new cars, 7.24% for used cars
Loan amounts: $8,000 minimum for most loans ($5,000 for refinance)
Loan terms: 24 to 72 months
Availability: 48 states (not available in Alaska or Hawaii)
Minimum credit score: 575
Pre-approval/Prequalification: Only pre-approval offered

The myAutoloan marketplace allows you to compare when you shop for new and used auto loans, refinance auto loans and lease buyout loans. Since myAutoloan functions as a marketplace for lenders and has a minimum credit score requirement of 575, it offers more opportunities for loan approval.

myAutoloan Reviews

MyAutoloan has overall positive reviews from customers and sports an overall rating of 4.1 out of 5.0 stars on Trustpilot from over 850 people. The company is also accredited with the Better Business Bureau (BBB) and has an A+ score from the organization. The main things customers talked about were myAutoloan’s fast and transparent online process and its helpful service agents.

Read more: myAutoloan review

Gravity Lending

Starting APR: 4.99%
Loan amounts: Varies
Loan terms: 36 to 84 months
Availability: 50 states
Minimum credit score: 640
Pre-approval/Prequalification: Only prequalification offered

Gravity Lending offers auto refinance loans, lease buyouts and cash out loans for borrowers. Rates start at 4.99% APR for refinancing, although interest rates will vary depending on the lender you are paired with. Customers can find loan terms from 36 to 84 months, which has earned Gravity Lending our award for “Flexible Loan Terms”.

Gravity Lending Reviews

Among customers, Gravity Lending has stellar customer service reviews. On Trustpilot they scored a perfect 5.0-star rating from almost 1,800 reviews. On the BBB website they received a rating of 4.9 out of 5.0 from over 1,500 customers.

On both sites, the company was praised by customers for having agents that went the extra mile and for having an overall streamlined process.

Ally

Starting APR: 4.74%
Loan amounts: $1,000 to $300,000
Loan terms: 36 to 75 months
Availability: 48 states (not available in Nevada, Vermont or Washington, D.C.)
Minimum credit score: 580
Pre-approval/Prequalification: Only prequalification offered

Ally is one of the largest car finance companies in the U.S. The lender offers loans on new or used vehicles, auto loan refinancing and lease buyout services. According to our research, APRs for refinancing start as low as 4.74% and loan terms of up to 75 months are available. Ally has a minimum credit score requirement of 580, making it easier for those with subprime credit to get approved.

Ally Reviews

When it comes to Ally, customer reception tends to be on the negative side. They scored a 1.5 out of 5.0 from Trustpilot reviewers and a 1.1 out of 5.0 on the BBB site. However, it should be noted that these are based on very few reviews which don’t represent Ally’s large customer base.

According to our research, here is where customers are getting their auto loans from in 2023:

Getting an auto loan with bad credit can be a difficult venture that often comes with many application denials. Even if you’re approved, you’ll typically get high interest rates. The sections below will walk you through the process of getting a car loan with bad credit and the resources you’ll need when applying for any loan.

How To Get a Car Loan With Bad Credit

When searching for a bad-credit car loan, here are some best practices to follow before applying:

1. Check Your Credit

The first step to getting any auto loan is to check your credit score — especially if you think you have bad credit. Knowing can help you set expectations of what rates you may receive and gauge whether a lender is giving you a good deal.

It’s also good to get a free credit report so you can check for any inaccuracies that may be lowering your score. You can request a free report from Experian and Equifax to review your information before moving forward. In the graphic below, you’ll see a breakdown of the factors that affect your credit score, and how much they affect your score.

2. Determine What You Can Afford

By keeping track of what’s left after payments for rent or mortgages, food, utilities, services and any other loans you have, you’ll have a much stronger idea of how much you can afford for a car loan. You’ll also know which terms you’d need in an auto loan contract and which cars you could afford.

You can use an auto loan calculator to estimate monthly car payments and experiment with different rates, term lengths and down payments to find what works best for you.

3. Gather Required Information

To apply for a car loan, you’ll need to have certain information handy, including your:

• Name, address and phone number
• Social Security number
• Credit score
• Gross annual income information
• Vehicle information (such as the model, age and mileage of the vehicle you want to buy or refinance)

Some financial institutions may also ask for additional information before a loan is approved, like your pay stubs, driver’s license or personal references.

4. Apply for Pre-Approval

Applying for pre-approval can give you the best chance to get approved for an auto loan with bad credit. A pre-approval will give you a conditional loan offer with estimated rates and terms that you’ll most likely receive. Having an offer in hand is something you can use to negotiate with other lenders for better deals. It can also help you feel more confident about what to expect when shopping around.

Keep in mind that auto loan pre-approval results in a hard credit check which can lower your credit score temporarily. We also recommend not applying for multiple pre-approvals at the same time — so you can avoid being treated as an inquiry.

5. Compare Lenders

Compare providers when searching for the best bad credit auto loan for your situation. Try looking for lenders that specialize in bad credit financing along with those with low credit score and income requirements. Also, shop around with multiple types of lenders to give yourself the best chance of getting favorable rates and terms.

How To Get Approved for a Bad-Credit Car Loan

When you apply for a standard used or new car loan or refinance loan, you may not be approved the first time if you have a bad credit history. Here are some tips that can help you increase your chances of getting approved by an auto loan lender:

Apply With a Co-Signer

You can ask someone with a strong credit report who you trust to co-sign a bad credit auto loan. By co-signing, the person agrees to pay back the loan if you default. This allows you to take advantage of lower interest rates that you would otherwise not get.

Buy a Car With Cash

If you can afford to buy a vehicle with cash, it might be your best option — even if it’s not the car of your dreams. Owning a car outright means you don’t risk repossession. Since you don’t owe any money on the vehicle, it can be considered a financial asset rather than a liability. This can help bring your credit score up for future car shopping.

Make a Large Down Payment

If you make a large down payment when purchasing your used or new car, it will decrease the loan amount. This makes it more likely that a lender will approve your loan since it’s reducing the overall risk.

Buy From a Private Seller

If you’re looking to buy a used car, you’ll typically pay less by buying from a private seller rather than a dealership. These purchases can be financed with a personal loan or a private party auto loan.

Improve Your Credit Score

Raising your credit score takes time, so it won’t help you get car financing in the short term. But increasing a poor credit score by paying off credit cards and always making monthly payments on time will eventually improve your FICO^® score. As your score increases, it will open the way to getting better rates and increase your chances of getting approved.

For those with bad credit, average auto loan rates range from 11.53% to 21.32% on average for new and used vehicles. Subprime or bad credit is typically reflected in a FICO score of 579. If your credit score falls below this threshold, a lender may assume an inability to pay bills on time and can result in higher interest rates or a lack of loan eligibility.

What Is a Good APR for a Car Loan With Bad Credit?

A good APR for a car loan with bad credit depends mostly on the average interest rate for your credit score band. For example, if you fall into the fair category on the FICO credit score model and are looking for a new car, a rate below 11.53% would be a good deal. It’s best to gauge whether you’re getting a favorable APR off your own unique financial situation.

Current Average Auto Loan Rates

The tables below show average auto loan interest rates by credit score for new and used cars, according to Experian’s State of the Automotive Finance Market Q1 2023 report:

Because consumers rely on us to provide objective and accurate information, we created a comprehensive rating system to formulate our rankings of the best auto loan companies. We collected data on dozens of loan providers to grade the companies on a wide range of ranking factors. The end result was an overall rating for each provider, with the companies that scored the most points topping the list.

Here are the factors our ratings take into account:

• Reputation: Our research team considered ratings from industry experts and each lender’s years in business when giving this score.
• Rates: Auto loan providers with low APRs and high loan amounts scored highest in this category.
• Availability: Companies that cover a variety of circ*mstances are more likely to meet consumer needs.
• Customer experience: This score is based on customer satisfaction ratings and transparency. We also considered the responsiveness, friendliness and helpfulness of each warranty company’s customer service team based on our shopper analysis.

Our credentials:

• 300+ hours researched
• 25 companies reviewed
• 2,000+ consumers surveyed

*Data accurate at time of publication.