Capital One
4.1Apply on partner site
- 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
Rebecca Betterton is a writer for Bankrate who has been reporting on auto loans since 2021. Through her writing, Rebecca aims to provide clarity and accessibility to the automotive loans industry as the cost to finance new and used vehicles continues to climb due to steep inflation.
Pippin Wilbers is a Bankrate editor specializing in auto loans. Pippin is passionate about demystifying complex topics, such as car financing, and helping borrowers stay up-to-date in a changing and challenging borrower environment.
Mar 14, 2024
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.
The process of getting a bad credit car loan is a similar process to that of any other loan. To get started, follow these steps:
Having a firm grasp on your credt score will help when comparing lenders. According to FICO, any score below 580 is considered poor.
Choosing the right loan and best lender for you is based on which loan fits your budget and financial needs. When shopping for an auto loan, compare APRs across multiple lenders to make sure you are getting a competitive rate. Look for lenders that keep fees to a minimum and offer repayment terms that fit your needs. It is a good idea to gain at least three quotes before signing off on a loan. Give special attention to the following factors:
The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where and in what order products appear. This table does not include all companies or all available products. Bankrate does not endorse or recommend any companies.
The annual percentage rate (APR) includes your interest rate, plus any loan fees. It reflects the total cost of borrowing. | The period of time until your loan achieves maturity and is paid off in completion. Terms can be expressed in months or years, depending on the details of your loan. | The minimum credit score typically required to qualify for a loan with a given lender. Exact thresholds are not always disclosed by a lender and in certain cases the minimum score is the best estimate based on publicly available information. Credit score refers to FICO 9.0 unless otherwise stated. | |||
---|---|---|---|---|---|
| Apply on partner site | Apply on partner site | |||
APR from 7.49-
15.69% * with AutoPay | Term 24-84mo | Min credit score Not disclosed | Apply on partner site | Apply on partner site | |
| Apply on partner site | Apply on partner site | |||
APR from 4.99% | Term 24-84mo | Min credit score 600 | Apply on partner site | Apply on partner site | |
APR from 5.99-
28.55% | Term 24-72mo | Min credit score 640 | Apply on partner site | Apply on partner site | |
APR from 7.09% | Term 24-84mo | Min credit score 600 | Apply on partner site | Apply on partner site | |
APR from 6.84% | Term 24-84mo | Min credit score 600 | Apply on partner site | Apply on partner site | |
APR from 4.67% | Term 24-96mo | Min credit score 580 | Apply on partner site | Apply on partner site | |
APR from 6.59-
18.79% | Term 24-96mo | Min credit score 560 | Apply on partner site | Apply on partner site | |
APR from 4.67% | Term 24-96mo | Min credit score 580 | Apply on partner site | Apply on partner site | |
APR from 4.67% | Term 24-96mo | Min credit score 580 | Apply on partner site | Apply on partner site | |
APR from 6.99% | Term 36-84mo | Min credit score Not disclosed | Apply on partner site | Apply on partner site | |
| Apply on partner site | Apply on partner site |
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% |
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.
Lender | APR range | Term |
---|---|---|
Capital One | Not specified | 24 to 84 months |
Autopay | Starting at 4.67% | 24 to 96 months |
Carvana | 7.95%-27.95% | 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.
Apply on partner site
Who this lender is best for: Drivers who don't mind a limited selection of vehicles and want a large shopping window.
Impact on financial wellness: A soft credit check is used for prequalification. You will undergo a hard credit pull once you fully apply.
Time to receive funds: Capital One borrowers can receive funding as soon as the same day they apply.
Fees: Capital One charges a late fee for loan holders.
Additional requirements: A loan through Capital One cannot be used at any auto dealership. Your vehicle will have to come from one of their 12,000 participating dealerships.
Special features: Done fully online via the Auto Navigator. Once you prequalify current rates and expected monthly costs will be presented for available vehicles.
Apply on partner site
Read our Bankrate review
Apply on partner site
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.
If you are applying for a refinance loan with poor credit, keep the following constraints in mind.
The process of improving your credit takes quite a bit of time. But the stronger your credit is, the better rates and terms you will receive. Some ways to work towards increasing your credit score include:
Applying for a loan with a co-signer who has excellent credit will greatly increase your likelihood of gaining loan approval. The role of a co-signer serves as an extra layer of protection for the lender. The lender gains security because the co-signer is on the hook for payments if the primary borrower can't make them. Because of this, having a co-signer can earn you a decent rate and term, even if you don't have the best credit.
While this answer varies by specific lender, the better your score is, the better your rates and terms will be. If you have low or no credit, you may still qualify for a loan but should expect a steeper APR. In the third quarter of 2023, drivers with scores of 500 or lower received an average rate of 14.17 percent for new and 21.18 percent for used cars, according to Experian.
Fortunately, a few lenders are moving away from using credit scores as the sole measure of ability to pay off loans. Instead, lenders are considering factors such as work or education history.
There are still ways to get behind the wheel following an initial denial. Firstly, it is important to take time to improve your credit. Do this by paying down any debt to lower your credit utilization rate. Otherwise, consider getting a co-signer for your auto loan.
When applying for an auto loan, lenders will require proof of income and employment, personal details — date of birth, Social Security number, address and phone number — proof of insurance and vehicle information. It is important to fill out the application completely and correctly to ensure you avoid denial due to errors on the application.
When you have bad credit and no one to stand as your co-signer, it is best to look for lenders that use other factors to measure risk. Many online lenders use education and work history to determine rates and terms, for example.
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: