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Best bad credit auto loan rates for February 2024

Feb 05, 2024

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Bankrate’s best auto loans for borrowers with bad credit are selected based on interest rates, terms, transparency and — most importantly — flexible eligibility requirements. While a bad credit auto loan is technically no different from a normal loan, you can expect higher interest rates.   

To gain approval for an auto loan, lenders will assess how much of a risk it is to lend to you based on your credit history and how much the vehicle is worth compared to the loan amount. That risk level goes into determining the interest rates and terms available to you. This means getting lender approval with poor credit history can be a challenge.  

But it is possible. Generally, bad credit falls below 580. Many lenders — including some selected as top bad credit lenders by Bankrate — are moving past the archaic approach of purely credit-based lending judgements and factor in aspects such as payment history on previous auto loans, work history or education. 

 

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REFINANCE

NEW

REFINANCE

USED

USED

REFINANCE

REFINANCE

USED

NEW

USED

REFINANCE

REFINANCE

NEW

REFINANCE

  • Refinance, lease buyout, and cashout refi available
  • Save hundreds by skipping costly admin and loan processing fees
  • E-sign your documents from anywhere, effortlessly
Apply on partner site
  • Network of dealer partners has closed $1 billion in bad credit auto loans
  • Specializes in bad credit, no credit, bankruptcy and reposession
  • In business since 1999
  • Easy, 30-second pre-qualification form
  • Bad credit applicants must have $2000/month income to qualify
Apply on partner site
APR from
5.24- 24.99%
Term

12-120mo

Min credit

640

Apply on partner site
APR from
7.49- 15.69%
* with AutoPay
Term

24-84mo

Min credit

Not disclosed

Apply on partner site
  • Network of dealer partners has closed $1 billion in bad credit auto loans
  • Specializes in bad credit, no credit, bankruptcy and reposession
  • In business since 1999
  • Easy, 30-second pre-qualification form
  • Bad credit applicants must have $2000/month income to qualify
Apply on partner site
APR from
4.99%
Term

24-84mo

Min credit

600

Apply on partner site
APR from
5.99- 28.55%
Term

24-72mo

Min credit

640

Apply on partner site
APR from
7.09%
Term

24-84mo

Min credit

600

Apply on partner site
APR from
6.84%
Term

24-84mo

Min credit

600

Apply on partner site
APR from
4.67%
Term

24-96mo

Min credit

Not disclosed

Apply on partner site
APR from
6.59- 18.79%
Term

24-96mo

Min credit

560

Apply on partner site
APR from
4.67%
Term

24-96mo

Min credit

Not disclosed

Apply on partner site
APR from
4.67%
Term

24-96mo

Min credit

Not disclosed

Apply on partner site
APR from
6.99%
Term

36-84mo

Min credit

Not disclosed

Apply on partner site

What are bad credit auto loans and how do they work?

Auto loans are secured loans that use the car you buy as collateral. A bad credit auto loan is essentially the same as a normal auto loan but usually with higher interest rates and more expansive acceptance criteria.  

You are typically asked to pay a fixed interest rate and make monthly payments for 24 to 84 months, at which point your car will be paid off. Many dealerships offer their own financing, but you can also find auto loans at national banks, local credit unions and online lenders. 

When you finance a car it is often a secured loan, which tend to come with lower interest rates than unsecured loan options, like personal loans. According to the automotive finance study for the third quarter of 2023 by Experian, the average loan rates by credit score are the following.

Credit score New cars Used cars
781 to 850 (super prime) 5.61% 7.43%
661 to 780 (prime) 6.88% 9.33%
601 to 660 (nonprime) 9.29% 13.53%
501 to 600 (subprime) 11.86% 18.39%
300 to 500 (deep subprime) 14.17% 21.18%

Types of lenders that offer bad credit loans  

Before agreeing to risky terms offered by buy here, pay here dealers, consider other options for financing your vehicle with poor credit. It is wise to prequalify to more than just one lender to ensure you get the best deal for your circumstances. Along with this, consider the drawbacks and advantages that come with each lender type. 

Consider the following bad credit lender options when shopping for your next car.  

  • Online lenders: Shopping online allows you to compare and apply for many different lenders simultaneously. It is also likely that online lenders will offer loan preapproval, which allows you to see your potential rates before you commit to financing. If you prefer the fully online experience, consider a retail and finance combined approach, like Carvana offers.
  • Banks and credit unions: If you have a relationship with a bank or credit union, it is wise to start there. You will likely save money working with a bank that you have already created trust with. Typically, direct lenders offer assistance either at brick-and-mortar locations or online.  
  • Subprime auto lots: The loans offered through these dealers come from a bank or credit union working with the lot. While these are not always the best rates available, it does offer the convenience of a one-stop shop. If the bad-credit dealer route is right for you, come prepared with competing rates to negotiate the best deal. 
  • Buy-here, pay-here dealerships. Buy-here, pay-here dealerships cater to drivers with subprime credit scores. However, due to the high rates and frequent shady practices, these dealerships should only be considered as a last resort. 

Compare the best bad credit auto loan rates in February 2024

Lender APR range Term
Capital One Not specified 24 to 84 months
Autopay Starting at 4.67% 24 to 96 months
Carvana Not specified 12 to 72 months
iLending 6.59%-18.79% 12 to 96 months

Loan details presented here are current as of  Jan. 9, 2024. Check the lenders’ websites for more current information. The auto loan lenders listed here are selected based on factors such as APR, loan amounts, fees, transparency, credit requirements and more.

Best bad credit auto loan lenders in 2024

Best for prequalification

Min. credit score:
Not disclosed
Fixed APR From:
Not disclosed
Loan amount:
starting at $4,000
Term lengths:
2 to 7 years
Min. annual income:
Not disclosed
Overview: Capital One offers a fully online experience for new and used purchase loans and refinancing. With no credit requirement, drivers with bad credit can get competitive rates and have the comfort of prequalification.
Why Capital One is the best for prequalification: Applying for prequalification can give you the confidence of a loan offer without the hard credit pull. It provides you with your predicted rate and terms without any impact on your credit. 

Best for shopping multiple offers

Min. credit score:
Not disclosed
Fixed APR From:
4.67%
Loan amount:
$2,500– $100,000
Term lengths:
2 to 8 years
Min. annual income:
Not disclosed
Overview: Autopay is an online marketplace showcasing loans from banks, credit unions and other lending institutions. The convenience of comparing multiple offers helps get the best deal with bad credit.  
Why Autopay is the best for shopping multiple offers: The convenience of comparing multiple offers helps get the best deal with bad credit. Although the minimum credit score is not disclosed, the range of lender options fosters a wide range of availability. 

Best for fully online experience

Min. credit score:
Not disclosed
Fixed APR From:
Not disclosed
Loan amount:
Not specified
Term lengths:
3 to 6 years
Min. annual income:
Not disclosed
Overview: Carvana is an online car buying and financing option, which allows drivers to purchase from its website. It does not have perfect credit requirements, and you can view loan options without a hard credit pull. 
Why Carvana is the best for a fully online experience: Although a loan with Carvana can only be achieved by purchasing from its online vehicle platform, Carvana offers loans with a low minimum annual income requirement of $4,000 — much lower than traditional lenders.

Best for bad credit refinance

Min. credit score:
560
Fixed APR From:
6.59% –18.79%
Loan amount:
not specified
Term lengths:
2 to 8 years
Min. annual income:
Not disclosed
Overview: Based on partnerships with banks and credit unions, iLending works to find an improved loan for your financial needs through its network.
Why iLending is the best for refinance: iLending boasts a low credit score requirement of 560 and its structure is built to foster directly to those who need a bad credit refinance loan.

Pros and cons of bad credit auto loans

Securing vehicle financing aimed at poor credit borrowers can be an excellent way to get a car but comes with risks. Consider the benefits and drawbacks of a bad credit auto loan.
Green circle with a checkmark inside

Pros

  • On-time payments can improve your credit score
  • More options for shoppers who might not have access otherwise
  • Less stringent credit requirements
Red circle with an X inside

Cons

  • Potentially high interest rates
  • Higher monthly cost
  • Likelihood of additional fees

What to know before applying for a bad credit auto loan 

All borrowers securing an auto loan should shop around with a few lenders before signing, but that step is all the more important with bad credit auto loans. Generally, the worse your credit, the higher the interest rates. When considering a bad credit lender, pay close attention to restrictions to ensure you qualify for the best rates and terms possible. 

As a borrower with poor credit, signing off on a longer term to pay less each month can feel tempting. But this is not always the best idea. A longer-term loan will mean more money spent over the entire loan. 

Finally, look for lenders that offer prequalification so you can get an idea of possible rates without damaging your credit.

4 tips on how to secure an auto loan with bad credit

It is possible to get a car loan with bad credit, although having bad credit will raise the rates you're offered. If you are having trouble getting approved or finding acceptable rates, try taking these steps:
  1. Make a large down payment. A larger down payment will lower your monthly payment, and it could also help you qualify for better rates because it reduces the amount you have to finance.
  2. Get a co-signer. A co-signer with good credit will take on some responsibility for your loan if you default, but they can also help you qualify for the loan and potentially for a lower rate.
  3. Reduce existing debt. Before applying for an auto loan, pay down as much debt as you can and avoid opening new accounts, like credit cards.
  4. Check your credit report. At least 30 days before you plan on applying, check your credit report. Dispute any inaccurate information to get it removed and boost your score.

What to consider when refinancing your car with bad credit

If you are applying for a refinance loan with poor credit, keep the following constraints in mind. 

  • Vehicle mileage: The number of miles clocked on your vehicle's odometer greatly impacts the value of your car. Lenders' constraints can differ by tens of thousands of miles, so check for these types of restrictions.  
  • Age of vehicle: Many lenders will not refinance a vehicle over 10 years old.
  • Loan amount: Most lenders present minimum loan amounts for refinance loans. Depending on your financial state, factor in the entire cost you will need.   

FAQs about bad credit auto loans

Methodology

To select the top bad credit car loans, Bankrate considers 18 different factors. These factors include the loan amount, repayment options, acceptance criteria and dealership requirements. Each lender holds a score based on four categories. These categories include: 

  • Availability: This accounts for loan amounts, type, availability in each state, dealership requirements and range of repayment options.
  • Affordability: Primarily, this section covers expected APR, acceptance criteria, discounts for autopay and the number of fees. 
  • Customer experience: This category includes online access, support availability, shopping window, whether there's an option for automatic payments and app availability.
  • Transparency: Here prequalification and disclosure of rates and fees are accounted for.