Best bad credit auto loan rates for February 2023

Written by
Rebecca Betterton
Edited by
Rhys Subitch
Reviewed by
Mark Kantrowtiz

Feb 02, 2023

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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

4.0

Bankrate Score

  • Pre-qualify for an auto loan in minutes with no impact to your credit score
  • See your personalized rate and monthly payment while searching millions of cars
  • Adjust things like down payment, term length and more to build the deal that fits your finances best
  • Know your financing options before visiting the dealer

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3.9

Bankrate Score
APR from

2.83- 36.00%

Term

60mo

Min credit

300

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4.2

Bankrate Score
APR from

2.99%

Term

48-60mo

Min credit

300

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3.5

Bankrate Score
APR from

5.24%

Term

60mo

Min credit

300

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3.9

Bankrate Score
APR from

2.14%

Term

48-60mo

Min credit

300

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APR from

5.04- 14.99%

Term

24-84mo

Min credit

600

4.2

Bankrate Score
APR from

2.99%

Term

48-60mo

Min credit

300

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APR from

3.99- 24.99%

Term

60mo

Min credit

300

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3.8

Bankrate Score
APR from

7.29- 11.54%

Term

36-72mo

Min credit

300

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3.9

Bankrate Score
APR from

6.49%

Term

36-72mo

Min credit

300

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4.1

Bankrate Score
APR from

5.61- 29.99%

Term

24-84mo

Min credit

300

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3.2

Bankrate Score
APR from

5.19%

Term

60mo

Min credit

300

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Compare the best bad credit auto loan rates in February 2023

Lender Starting APR Term
CapitalOne Not specified 24 to 84 months
Autopay Starting at 2.99% 36 to 60 months
Carvana Starting at 6.85% 12 to 72 months
iLending Starting at 2.14% 12 to 84 months

Loan details presented here are current as of Jan. 4, 2023. 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 lenders of February 2023

Best for prequalification

Capital One
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Min. credit score:
300
Fixed APR From:
Not disclosed
Loan amount:
$5,000– $200,000
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

AutoPay
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Min. credit score:
300
Fixed APR From:
2.99%
Loan amount:
$2,500– $100,000
Term lengths:
4 to 5 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

Carvana
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Read our Bankrate review

Min. credit score:
Not disclosed
Fixed APR From:
6.85%
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

iLending
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Apply on partner site

Min. credit score:
300
Fixed APR From:
2.14%
Loan amount:
$2,500– $100,000
Term lengths:
4 to 5 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.

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

Auto loans are secured loans that use the car you are buying 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. 

Because when you finance a car it is often a secured loan they 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 2022 by Experian, the average loan rates by credit score are the following.

Credit score New car loans Used car loans
781 to 850 3.84% 3.69%
661 to 780 4.90% 5.47%
601 to 660 7.25% 9.81%
501 to 600 10.11% 15.86%
300 to 500 12.93% 19.81%

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.

Types of lenders that offer bad credit loans  

There are many options when it comes to 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 lender options when shopping for your next car.  

  • Online lenders: Shopping online allows you to compare and apply for many different lenders all at once. 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 or Vroom.  
  • 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.  
  • Dealerships: The loans offered directly from the dealer 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 dealer route is right for you, come prepared with competing rates to negotiate the best deal. 

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 in tens of thousands of miles, so be sure to check for these types of restrictions.  
  • Age of vehicle: Many lenders will not refinance a vehicle that is over 10 years old due to the vehicle depreciation incurred over the life of the loan.  
  • 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.