May 12, 2019 12:00 PM PT

Best Bad Credit Auto Loans

Bad credit car loans can have interest rates up to 25% or even higher. While that sounds insanely high, they aren't the norm. Knowing what to look for in a car loan when you have bad credit is the key to success.

There are thousands of lenders out there that offer car loans for people with less than perfect credit. You can even have a recent bankruptcy, have only been on the job for a few months, and have no down payment, and these lenders will still give you a loan. You just have to meet their minimum requirements, which pale in comparison to the conventional loan standards.

Keep reading to learn which bad credit car loans might be right for you.

Who Needs Bad Credit Car Loans?

The good news is that having bad credit doesn't mean you can't get a car loan. There are loans out there for you. Just what makes you a candidate for a "bad credit car loan"?

  • You've been turned down by a conventional lender. The most common bad credit car loan borrowers are those who got rejected by the dealer or their bank. This doesn't mean that you'll never get a car. It just means you need to look in the subprime market for your loan.

  • You've suffered a bankruptcy. If you had to throw in the towel and get some help via bankruptcy, lenders may have a harder time willingly giving you a loan. Bad credit car loan lenders often have programs available for people just like you, though.

  • You have bad credit and no down payment. If you have a lower credit score (lower than 660) coupled with no money or trade-in to put down on a new car purchase, conventional lenders may turn their backs on you. Second-chance lenders may have a program that is just right for you, though.

What to Look for in Bad Credit Car Loans

You could do a search online and find hundreds of bad credit car loan lenders, but they aren't all created equal. In the subprime market, you have to be careful.

Predatory lending is a real thing. Those lenders are just waiting for the next vulnerable applicant to come along. Rather than being taken advantage of, learn what to look for in bad credit car loans.

What to Look For:

  • Decent Interest rates
  • Clear Programs
  • No Application Fees
  • Good Loan Terms
  • Many Options

Decent Interest Rates
It sounds counterintuitive. If you have bad credit, you assume you'll have to take a high interest rate. While your interest rate will be higher, it shouldn't be too high. A good baseline to use is the current auto loan interest rates for borrowers with good credit. Call your local bank and find out that rate. Your interest rate on a bad credit car loan shouldn't be more than twice that amount. If it is, look elsewhere.

Clear Programs
Buyers in the market for bad credit car loans are often seen as vulnerable. Predatory lenders can take advantage of that by using switch-and-bait terms on you. They tell you one thing, but then deliver another after you sign the loan documents. If you don't know the terms or you don't understand the documents, ask or get advice before signing on the dotted line.

No Application Fees
You shouldn't have to pay to get a pre-approval from a lender, even on a bad credit car loan. If the lender asks for money upfront, it's a good sign that you should find another lender.

Good Loan Terms
It's easy to get caught up in the lower monthly payment that a lender quotes you with an 84-month car loan, but don't do it. You should aim for a car loan between 36 and 60 months. The longer you stretch out the term, the more interest that you pay over the life of the loan. If you are already paying a high interest rate, the last thing you want is to stretch the term out any longer than necessary.

Many Options
Try not to get sucked into a bad credit car loan by a lender that says they only have one program that you qualify to receive. This can make you feel desperate—as if you have to take that loan. Instead, look for lenders that have a few options and/or work with a network of lenders that can each offer you an option that you can then compare.

Best Bad Credit Car Loans

Best Bad Credit Car Loans with No Money Down
If you have a credit score of at least 500 and monthly income of at least $1,800, may be a good option. networks with hundreds of lenders, giving you a better chance at getting an approval for your bad credit auto loan. You fill out one application and they match you up with the lender(s) that are a good match.

The nice thing about is that they work with lenders that don't require a down payment. Whether or not you will need one depends on the exact circumstances of your situation. You won't know until you apply and get answers from various lenders as to what you may need, but your chances are higher getting a loan here with no down payment than other lenders. has some of the most competitive rates in the industry even for borrowers with bad credit. Once matches you with a lender and sends you an offer, you have 30 days to decide if it's the right loan for you.

Best Bad Credit Car Loans Online

Auto Credit Express
Auto Credit Express isn't a direct lender, but they network with hundreds of lenders to help you find the right subprime auto loan. They specialize in loans for borrowers with a past bankruptcy, low credit score, and/or low income.

The entire application process is online and takes approximately 3 minutes. Once ACE receives your application, they will then match you with appropriate lenders. You will then deal with the lenders directly to determine which loan is right for you.

We like Auto Credit Express because even borrowers with a credit score as low as 500 can qualify for a loan. You can even get qualified for an auto loan with one of their lenders right after the discharge of your Chapter 7 bankruptcy. They operate in all 50 states and have special programs for military members.

Because Auto Credit Express isn't a lender themselves, they do sell your information to third parties. This is a part of their fine print terms that you are able to opt out of, but you have to check the box, which many people miss.

Best Bad Credit Car Loan from a Bank

Capital One Auto Financing
If you feel better getting your auto financing from a well-known bank, Capital One is a great choice. They accept applicants with credit scores as low as 500, which shocks many people. Big-name banks typically want borrowers with higher credit scores.

You need a minimum monthly income of around $1,800 in order to qualify

Capital One offers the unique option to get pre-qualified for a loan with them without doing a hard inquiry on your credit report. Once you have the offer, you can take it to any of the listed participating dealers.

If you find a car you want to buy, you give the dealer your Offer Summary and they finish the process. This includes pulling a hard inquiry on your credit report and verifying the information you provided on the application.

If everything matches as you stated on the application, your approval shouldn't take long, and you could be a new car owner even with bad credit with financing from a big-name bank.

Best Bad Credit Car Loan with a Cosigner is a direct lender. You apply with them and get an approval or denial directly from them. If you apply during business hours, you could get an answer within 30 minutes of your application. Typically, you need a credit score of at least 525 in order to get a loan with them, and they do allow fairly high debt ratios (up to 50%). We don't recommend that you carry as much as 50% of your income in debt, but know that they have flexible guidelines.

Some bad credit auto loan lenders don't allow co-signers, but does allow them. allows you to purchase a car that is up to 8 years old and has no more than 100,000 miles on it. They do offer loan terms as long as 72 months, but as we stated above, it's best if you keep your term as short as possible while still keeping the payment affordable.

One unique aspect of's requirements is that they don't state a minimum income that you must have in order to qualify. Many other bad credit auto loan lenders require a specific amount of income in order to consider you for the loan. Once you have your approval from, you can purchase a car from any franchised car dealer, such as Toyota, Chevy, or Nissan.

Other Bad Credit Car Loans to Consider

RoadLoans is a direct lender. You apply with them and get your approval within a matter of minutes. If you accept the loan, you can take your approval directly to one of their network dealers and use it like cash. Unlike other bad credit lenders, RoadLoans doesn't have a minimum required credit score.

Wells Fargo
Wells Fargo is another big bank that does offer bad credit auto loans. Their guidelines aren't as flexible as other bad credit auto lenders that specialize in bad credit loans, but they do offer the option if you want a loan from a big bank. Their interest rates tend to be on the higher side when you compare them to their conventional counterparts. accepts all credit levels, even poor credit. They typically provide an approval the same day that you apply and they don't charge application fees. Once you apply, they match you up with a dealer and lender in the area that handles bad credit or no credit applicants.

They are a marketplace for consumers looking to buy a car but can't find traditional financing.

Bottom Line

Make sure that you do your research when you search for bad credit car loans. Don't let a lender talk you into a deal that you aren't comfortable taking. There are literally thousands of programs out there that can help you buy the car you need despite your low credit score and/or lack of down payment.

More from CreditDonkey:

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