Securing an auto loan with bad credit can feel like an uphill battle. When your credit score is low, traditional lenders may hesitate to offer financing, leaving you in search of alternative options.
However, the good news is that there are many lenders who specialize in offering auto loans to individuals with less-than-perfect credit.
In this article, we’ll explore the top 10 auto loans for bad credit in 2024, comparing rates, loan terms, eligibility requirements, and special features that make each one unique.
Whether you’re in the market for a new car or looking to refinance an existing loan, this guide will help you find a loan that fits your needs and budget.
What is an Auto Loan for Bad Credit?
10 Factors to Consider Before Choosing a Loan Provider
An auto loan for bad credit is a type of vehicle financing that’s designed specifically for borrowers with poor credit scores, typically below 600.
These loans often come with higher interest rates, as lenders view borrowers with bad credit as higher-risk clients. However, these loans allow individuals with less-than-perfect credit histories to purchase or refinance a car.
How Bad Credit Affects Auto Loan Rates
Your credit score is one of the key factors lenders use to determine the interest rate on your auto loan. The lower your credit score, the higher your interest rate is likely to be.
For example, someone with a credit score below 500 could face rates as high as 20% or more, while someone with a higher score may qualify for rates as low as 4%.
Top 10 Auto Loans for Bad Credit in 2024
When shopping for an auto loan with bad credit, it’s essential to compare lenders carefully to find the best terms for your financial situation.
The following 10 lenders represent some of the best options for borrowers with bad credit, offering competitive rates, flexible terms, and more.
1. Capital One Auto Loans
Best for Flexible Terms and Online Tools
Capital One offers a simple and user-friendly auto loan application process, along with flexible terms for borrowers with bad credit.
Key Features:
- Loan Amounts: From $4,000 to $50,000.
- APR: Starting at 3.99% for good credit, but higher for borrowers with bad credit.
- Loan Terms: Available for 36 to 72 months.
- Eligibility Requirements: Minimum 600 credit score, proof of income, and stable employment.
Pros:
- Prequalification with no impact on credit score.
- Easy online tools to help find your monthly payments.
- Available in all U.S. states.
Cons:
- High-interest rates for those with bad credit.
- Loans are subject to approval based on credit score and income.
Capital One is a solid choice for borrowers who want a hassle-free application process with the option to prequalify for a loan without impacting their credit score.
2. RoadLoans
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Best for Fast Approval and Bad Credit Consideration
RoadLoans, a subsidiary of Santander, specializes in helping customers with poor credit secure auto financing. The company is known for fast approval and lenient eligibility criteria.
Key Features:
- Loan Amounts: Up to $40,000.
- APR: Rates start at 5.99%, but they can be much higher depending on your credit.
- Loan Terms: Typically 36 to 72 months.
- Eligibility Requirements: Minimum 500 credit score, stable income, and proof of employment.
Pros:
- Fast online application with approval in minutes.
- Works with borrowers with credit scores as low as 500.
- Flexible loan terms and a large network of participating dealerships.
Cons:
- Higher interest rates for those with poor credit.
- Fees and restrictions for certain loan types.
RoadLoans is ideal for individuals who need quick approval and are willing to accept higher rates for a chance to finance a vehicle.
3. Carvana
Best for Purchasing a Car Online with Bad Credit
Carvana is a unique auto loan provider that allows you to buy a car online and have it delivered directly to your door, making it a convenient option for bad-credit borrowers who want to avoid dealership hassle.
Key Features:
- Loan Amounts: Financing for cars priced between $6,000 and $100,000.
- APR: Starting at 3.90% for well-qualified borrowers, but higher for bad credit.
- Loan Terms: Available for 36 to 72 months.
- Eligibility Requirements: Minimum 550 credit score, proof of income, and stable employment.
Pros:
- Streamlined online application and car-buying process.
- No-haggle pricing and delivery to your door.
- Quick approval and flexible loan terms.
Cons:
- Higher APRs for borrowers with bad credit.
- Only available in certain states.
Carvana is great for those who prefer an entirely online car-buying experience, and it’s a good choice for bad-credit borrowers who need financing fast.
4. MyAutoloan
Best for Loan Comparisons and Multiple Lender Options
MyAutoloan helps borrowers compare offers from multiple lenders, making it easier to find the best rates and terms for your bad-credit auto loan.
Key Features:
- Loan Amounts: From $8,000 to $100,000.
- APR: Rates start at 3.99% for well-qualified borrowers.
- Loan Terms: Flexible options from 36 to 72 months.
- Eligibility Requirements: Minimum 600 credit score, proof of income, and stable employment.
Pros:
- Compare rates from up to 4 lenders in one place.
- Offers for both new and used cars.
- Fast approval process with an online application.
Cons:
- Higher rates for bad-credit borrowers.
- Fees for certain loan types.
MyAutoloan is a top option for those who want to compare auto loan offers and find the best deal available.
5. LendingTree
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Best for Personalizing Loan Offers Based on Your Credit
LendingTree’s auto loan platform helps borrowers find the right lender for their needs by offering personalized loan options based on your credit profile.
Key Features:
- Loan Amounts: From $1,000 to $50,000.
- APR: Starting at 2.99% for well-qualified borrowers, but higher for bad credit.
- Loan Terms: Available for 36 to 72 months.
- Eligibility Requirements: Minimum 600 credit score, stable income, and employment verification.
Pros:
- Quick and easy comparison tool for various loan offers.
- Lenders specialize in offering loans to those with bad credit.
- Personal loan options for bad-credit car buyers.
Cons:
- Rates can be high for borrowers with poor credit.
- Requires a decent credit score to secure the lowest rates.
LendingTree is perfect for borrowers who want to see a variety of loan offers and select the one that best fits their financial situation.
6. Auto Credit Express
Best for Specializing in Bad Credit Auto Loans
Auto Credit Express is known for specializing in bad-credit auto loans. They work with a wide network of dealers and lenders to offer financing options to those with poor credit scores.
Key Features:
- Loan Amounts: Up to $35,000.
- APR: Starts around 5.99%, but higher rates may apply.
- Loan Terms: Typically 36 to 72 months.
- Eligibility Requirements: Minimum 550 credit score, proof of income, and steady employment.
Pros:
- Works with borrowers who have very bad credit (down to 550).
- Strong network of participating dealers and lenders.
- Quick, simple online application process.
Cons:
- Higher interest rates for borrowers with bad credit.
- Limited loan amounts for certain credit profiles.
Auto Credit Express is ideal for those who have low credit scores and need to find lenders who are willing to work with them.
7. LightStream
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Best for Low-Interest Rates for Good Credit and Co-Signers
LightStream, a division of SunTrust, offers competitive rates for auto loans and is an excellent choice for borrowers who have a co-signer or good credit.
Key Features:
- Loan Amounts: From $5,000 to $100,000.
- APR: Starts as low as 3.49% for well-qualified borrowers.
- Loan Terms: Flexible terms from 24 to 84 months.
- Eligibility Requirements: Minimum 660 credit score, proof of income, and good financial standing.
Pros:
- Extremely low rates for good-credit borrowers and co-signers.
- No fees or prepayment penalties.
- Offers quick approval and flexible loan terms.
Cons:
- Requires a higher credit score or a co-signer for the best rates.
- Not specifically designed for those with bad credit.
LightStream is a great option for individuals with good credit or co-signers, as they can access very low-interest rates on auto loans.
8. Tradition Bank Auto Loans
Best for Local Auto Loan Assistance
For borrowers who prefer working with a local lender, Tradition Bank offers auto loans with flexible terms and the ability to speak with a loan officer directly.
Key Features:
- Loan Amounts: From $5,000 to $50,000.
- APR: Rates typically start at 6.00% for bad-credit borrowers.
- Loan Terms: Available for **36 to 72 months**.
- Eligibility Requirements: Minimum 550 credit score, proof of income, and steady employment.
Pros:
- Personalized service with a local bank representative.
- Offers competitive rates for borrowers in need of bad-credit loans.
- No hidden fees or prepayment penalties.
Cons:
- Limited availability based on your geographic location.
- Higher rates for those with poor credit scores.
If you prefer working with a bank that offers personalized customer service, Tradition Bank could be a great option for securing an auto loan.
9. Upstart
Best for Innovative Credit Decisions
Upstart is an online lending platform that uses AI and alternative credit data to help approve auto loans for borrowers who may not qualify with traditional lenders.
Key Features:
- Loan Amounts: From $3,000 to $50,000.
- APR: Starts around 5.49% but may be higher for bad credit.
- Loan Terms: Typically 36 to 60 months.
- Eligibility Requirements: Minimum 600 credit score, proof of income, and steady employment.
Pros:
- Innovative approval process based on more than just credit scores.
- Quick online application and fast approval.
- Works with borrowers who have lower credit scores.
Cons:
- Higher interest rates for bad-credit borrowers.
- Does not specialize in auto loans, so options may be limited.
Upstart’s unique approach to lending can be helpful for those who have poor credit but want to explore non-traditional approval methods.
10. Best Egg
Best for Quick Personal Loan-to-Auto Loan Conversion
Best Egg offers personal loans that can be used to purchase a car, making it a unique option for borrowers who may need extra flexibility.
Key Features:
- Loan Amounts: From $2,000 to $50,000.
- APR: Starts around 5.99%, depending on credit.
- Loan Terms: Available for 36 to 60 months.
- Eligibility Requirements: Minimum 600 credit score, proof of income, and steady employment.
Pros:
- Quick approval process and no origination fees.
- Loan terms are flexible and can be used for car purchases.
- Available for a range of credit types.
Cons:
- Higher interest rates for those with bad credit.
- Loans are typically unsecured, which means higher rates.
Best Egg is a good option for borrowers who prefer a personal loan option to finance a car purchase and who need quick access to funds.
Conclusion: Finding the Right Auto Loan for Bad Credit
When looking for the best auto loan for bad credit in 2024, it’s essential to carefully evaluate your options based on your credit score, financial situation, and the terms offered by different lenders.
Some borrowers may prefer the convenience of online lenders like Carvana or RoadLoans, while others may prefer to work with a more traditional bank like Capital One or LendingTree.
No matter which option you choose, always ensure that you understand the terms and conditions, especially the interest rate, loan duration, and fees.
With the right preparation and research, you can secure a loan that meets your needs and allows you to get the car you want, even with bad credit.
FAQs: Conclusion
1. Can I get an auto loan with bad credit?
Yes, many lenders specialize in offering auto loans for borrowers with bad credit. However, you may face higher interest rates and stricter eligibility requirements.
2. How can I improve my chances of getting approved?
Improving your credit score, having a steady income, and offering a substantial down payment can increase your chances of getting approved for an auto loan.
3. What interest rates should I expect with bad credit?
Interest rates can vary widely based on your credit score. For borrowers with bad credit, rates may range from 6% to 20% or more.
4. Should I get an auto loan through a dealership or a bank?
While dealerships may offer convenience, bank loans and online lenders often provide better rates and terms for borrowers with bad credit.
5. Are there any fees I should be aware of?
Some lenders may charge fees such as origination fees, prepayment penalties, or late payment fees. Always read the fine print and ask the lender about any potential fees before accepting an offer.