A less-than-perfect credit score can be a barrier to favorable terms on auto loans. Fortunately, even if your credit history has some blemishes (think scores below 670), you still have plenty of car loan options from credit unions and other financial institutions. And comparing those options is key to getting the best deal you can.
CNBC Select compared more than a dozen car loan lenders based on the types of loans offered, affordability, credit requirements and shopping experience they provide. Here are our top picks for car lenders that serve customers with bad or fair credit. (Read more about our methodology below.)
Compare offers to find the best auto loan
Best for shopping around
MyAutoLoan
Annual Percentage Rate (APR)
Starting at 5.49%
Loan purpose
New vehicles, used vehicles, refinancing, private party and lease buyout
Loan amounts
Starting at $8,000 (or $5,000 for refinancing)
Terms
24 to 72 months
Credit needed
FICO score of 575 or greater
Early payoff penalty
None
Late fee
Varies by lender
Terms apply.
Pros
- Open to borrowers with bad credit (minimum 575 score)
- No early payoff fees
- Prequalification available
- Provides multiple offers
- Fully online application available
- Co-borrowers and co-signers allowed
Cons
- Not available in all states
- Limited customer service
Who's this for? MyAutoloan is an excellent option if you have bad credit and want to shop around for the lowest rate possible. This online marketplace matches car shoppers with lenders based on their needs and the information they provide.
Standout benefits: MyAutoloan does a lot of the heavy lifting for you and will match you with up to four pre-qualified loan offers when you complete a short form. It uses a soft credit check to match you with lenders, so comparing offers won't affect your credit score — you'll only receive a hard inquiry if you apply for an offer.
Best for buying a car online
Carvana Auto Loan
Annual Percentage Rate (APR)
Starting at 6.85%
Loan purpose
Used vehicles
Loan amounts
Not specified
Terms
36 to 72 months
Credit needed
Not specified
Early payoff penalty
None
Late fee
$5 after a grace period of 16 days
Terms apply.
Pros
- Open to borrowers with bad credit
- No early payoff fees
- Prequalification available
- 100% online application process available
- Allows co-signers
Cons
- Financing is only available for cars sold through Carvana
- Not available in all states
Who's this for? Carvana may be a good option if you're shopping for a used car and want your car-buying experience to take place entirely online.
Standout benefits: Carvana allows you to get pre-qualified in two minutes without impacting your credit score, vehicles come with a 7-day Money Back Guarantee and the car is delivered directly to your door.
Best from a big bank
Capital One Auto Finance
Annual Percentage Rate (APR)
Depends on credit profile
Loan purpose
New vehicles, used vehicles, refinancing
Loan amounts
Starting at $4,000
Terms
36 to 72 months
Credit needed
Not specified
Early payoff penalty
None
Late fee
Depends on the lender
Terms apply.
Pros
- Open to borrowers with bad credit
- No early payoff fees
- Prequalification available
- Convenient online tools allowing to search for vehicles and check estimated loan terms
Cons
- Only available at participating dealers
- You must apply at the dealer to get the final loan terms
Who's this for? Capital One Auto Finance is a good choice if you have bad credit and would rather get a car loan from a national bank to take advantage of competitive rates.
Standout benefits: Capital One's Auto Navigator tool allows you to prequalify for offers with no impact on your credit score and adjust terms to best suit your needs.
Best for used vehicle selection
CarMax Auto Loan
Annual Percentage Rate (APR)
Not disclosed
Loan purpose
Used vehicles
Loan amounts
Starting at $500
Terms
36 to 72 months
Credit needed
Not specified
Early payoff penalty
None
Late fee
Varies by state and contract
Terms apply.
Pros
- Open to borrowers with bad credit
- No early payoff fees
- Prequalification available
- 100% online application process available
- Low minimum loan amount
- Allows co-borrowers
Cons
- Financing is only available for cars sold at CarMax
- Not available in all states
- Prices are non-negotiable
Who's this for? CarMax Auto Finance is worth considering if you're shopping for a used car and want access to a large inventory.
Standout benefits: CarMax allows you to adjust your desired monthly payment and APR to receive personalized terms for your prequalified offers in minutes. It also allows you to replace your financing at no cost if you find a better APR within 3 business days of your purchase.
Best for refinancing
Autopay Car Loan
Annual Percentage Rate (APR)
Starting at 4.67%
Loan purpose
Used and new vehicles, refinancing loans, lease buyout
Loan amounts
$2,500 to $100,000
Terms
24 to 96 months
Credit needed
Not specified
Early payoff penalty
None
Late fee
Varies by lender
Terms apply.
Pros
- Open to borrowers with bad credit
- No early payoff fees
- Prequalification available
- Wide loan amount range
- Allows co-applicants
Cons
- Loan approval may take up to 48 hours
- Loan funding can take up to two weeks
Who's this for? Autopay can be a great choice for car owners with imperfect credit looking to refinance their vehicle.
Standout benefits: While you can still finance a new or used vehicle through Autopay, it sounds out for its abundance of refinancing options. These include both traditional and cash-back financing, as well as lease-buyout financing.
More on our top car loans for bad credit
MyAutoloan
MyAutoloan works with some lenders that specialize in working with customers experiencing credit problems. It offers various types of loans, including used and new car loans, refinancing and lease buyouts. MyAutoloan will also accept co-signers.
The process is fast and convenient, only needing to fill out a quick confidential form. You'll then receive up to four prequalified offers you can choose from. Prequalification doesn't impact your credit score, but the lender you decide to go with will place a hard inquiry on your credit once you apply.
Auto loan purpose
New vehicles, used vehicles, refinancing, private party and lease buyout
Co-borrowers allowed?
Yes
Credit score requirements
575
Carvana
Known for its vehicle vending machines, Carvana provides loans for cars from its inventory and works with customers of all credit types and accepting co-signers. As with other lenders on this list, you can prequalify without a hard credit inquiry to get estimated financing terms.
Once you're prequalified, you'll see personalized terms under the image of every car you see on Carvana's website. After you choose a vehicle and schedule pickup or delivery, Carvana will perform a hard credit check and provide you with your finalized loan terms.
Auto loan purpose
Used vehicles only
Co-borrowers allowed?
Yes
Credit score requirements
Carvana does not have a minimum credit score requirement but some of its lenders may
Capital One Auto Finance
With Capital One Auto Finance, you can shop around for a new or used car using the bank's online Auto Navigator tool. While you'll only be able to pick from one of the participating car dealerships, according to Capital One, it's currently working with more than 12,000 dealers.
Capital One allows you to prequalify without a hard credit check, you'll only get a hard inquiry when you fully apply. You can also add a co-applicant to help you get approved and get more favorable terms. Once you prequalify, you'll be able to see expected rates and monthly payments for available cars.
Auto loan purpose
New vehicles, used vehicles, refinancing
Co-borrowers allowed?
Yes
Credit score requirements
Not advertised
CarMax Auto Finance
As the largest used-car retailer in the U.S., CarMax Auto Finance also provides financing for the cars it sells. There's no minimum score requirement as CarMax's wide range of financing sources allows them to work with customers with different credit profiles.
You can use the retailer's prequalification tool to get personalized terms, such as APR and monthly payments, with no impact on your credit. CarMax offers a Three-Day Payoff program if you find a better loan offer within three days of closing your CarMax loan.
Auto loan purpose
Used vehicles only
Co-borrowers allowed?
Yes
Credit score requirements
Not advertised, but the dealer states its finance sources accommodate most credit profiles
Autopay
Autopay is an online platform partnering with financial institutions that offer auto loans, which allows the company to work with customers in various credit situations. Besides loans on new and used cars, Autopay offers a range of refinancing products, including traditional and cash-back refinancing and lease-buyout refinancing.
It only takes a soft credit inquiry to prequalify and you can add a co-applicant. Once pre-qualified, you can compare offers from multiple banks and credit unions to pick the best deal. Should you decide to move forward, the lender will do a hard credit check and review your documents for final approval, which could take up to two days.
Auto loan purpose
Used and new vehicles, auto loan refinancing, lease buyout
Co-borrowers allowed?
Yes
Credit score requirements
Not advertised, but the dealer states it worked with borrowers of all credit profiles
What is a bad credit auto loan?
A bad credit auto loan is an auto loan for someone with a lower credit score. While there isn't an exact number, those with a score of less than 580 may have more difficulty securing financing through traditional loans at banks or credit unions.
Can I get a car loan with a 500 credit score?
It's certainly possible to get a car loan with a credit score of 500, even though that's considered a poor score. Your best bet would be to work with a lender that's known for giving loans to people with a subpar credit history. Because having a 500 credit score represents a significant risk to the lender, it will likely charge you a higher interest rate for the loan than if you had a better score. If possible, improve your credit before applying for a loan to get more favorable terms.
Which FICO® score is used for auto loans?
Generally, the main scoring models used for auto loan approval are the Vantage 3.0 and 4.0 scores, the FICO® Auto Score and the FICO® 8 and 9 scores.
What are auto loan interest rates for bad credit?
While individual interest rates for auto loans vary on several factors, according to Experian's Q4 2023 State of the Automotive Finance Market insights, the average new car loan rate for deep subprime borrowers (scores of 300 to 500) is 14.78% and 12.28% for subprime borrowers (501 to 600). The interest rates are even less favorable for used vehicles and reach 21.55% for deep subprime borrowers.
Ways to improve your chances of being approved
There are a number of ways you can improve your chances of being approved for a car loan. Here are a few key ones:
- Improve your credit score: With a lower credit score you'll not only have a harder time finding a loan, but you'll also get worse terms. Review your credit report for errors and focus on making on-time credit card payments to help raise your credit score.
- Get a co-signer: Asking someone to co-sign your loan with you will improve your approval chances, but should be thoroughly discussed first.
- Increase your down payment: While not always possible, paying more upfront can decrease your payments and how long it takes to pay off your loan which will improve your approval odds.
Auto loan calculator
Before taking on an auto loan, it's important to estimate your monthly payments. CNBC Make It offers a handy loan calculator that can help you see how much you will pay monthly, how long it will take to pay off the debt and how much you'll pay in interest.
FAQs
How do you buy a car with bad credit and no co-signer?
If you have bad credit, getting approved for a car loan without a co-signer can be more challenging — but it's still possible. Some lenders work with customers of all credit profiles. That said, you're more likely to qualify for a loan with a high interest rate, making your car purchase expensive. Make sure to shop around and get multiple loan offers so you can compare the terms and choose the option that makes the most sense for your budget.
What's the lowest credit score you can have to finance a car?
There's no specific minimum credit score required to finance a vehicle. Credit requirements vary by the lender as every lender has its own policies for how they evaluate loan applications.
Plus, while your credit may be important, lenders also look at other financial factors, such as your income and other debts you have. The more indicators they find that you're likely to pay back the loan on time and in full, the better your chances of getting approved.
Is it better to get an auto loan from your bank or the dealership?
Financing a car through a bank or credit union can help you secure a lower interest rate, especially if you already have a positive relationship with the institution — for example, you have a credit card that you always pay off on time.
On the other hand, it may be harder to qualify for bank financing if you have imperfect credit. Plus, dealerships can offer a more convenient experience. While a bank might take time to review your application, you can walk into a dealership and drive off the lot in your new car the same day.
What is the best time of the year to buy a car?
Typically, October through December are the best months to buy a car as you're more likely to find discounted offers at the end of the year. Plus, December's year-end sales provide the potential for even greater savings.
Can you get a car loan with a 500 credit score?
While it is possible to get a car loan with a credit score of 500 it will be more challenging to find a lender and the loan terms will likely be less favorable.
What is the easiest car company to get financing?
While this often depends on the specific individual, myAutoloan works with lenders who have specialized experience working with customers experiencing credit problems
Can you get a car loan with a 600 credit score?
Getting a car loan with a credit score of 600 is possible, but you may have more strict loan terms than with a higher score.
Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every car loan list is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of loan products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics. See our methodology for more information on how we choose the best car loans for bad credit
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Our methodology
To determine which auto loans are the best for consumers with bad credit, CNBC Select analyzed more than a dozen car loan providers, including banks, dealerships and online marketplaces.
When narrowing down and ranking the best car loans, we focused on the following features:
- Flexible minimum and maximum loan amounts/terms: Each lender provides more than one financing option that you can customize based on your monthly budget and how long you need to pay back your loan.
- Prequalification: Each lender offers prequalification which doesn't trigger a hard inquiry and allows you to get estimated loan terms before applying.
- Online user experience: The lenders on our list make it easy to complete most of or the entire financing process online.
- Ability to add a co-signer or co-borrower: Each lender offers the option to add a co-signer or co-borrower, which can help you get approved and receive more favorable terms. Note that a co-signer generally agrees to be responsible for your loan without getting any ownership rights for the financed vehicle. A co-borrower (or co-applicant), on the other hand, equally shares ownership of the car and loan.
- No early payoff penalties: The lenders on our list do not charge borrowers for paying off loans early.
- Streamlined application process: We considered whether lenders offered same-day approval decisions and a fast online application process.
- Customer support: Every loan on our list provides customer service available via telephone, email or secure online messaging. We also opted for lenders with an online resource hub or advice center to help you educate yourself about the personal loan process and your finances.
- Loan sizes: The above lenders provide loans in an array of sizes, from $500 to $100,000. Each lender advertises its respective payment limits and loan sizes, and completing a prequalification process can give you an idea of what your interest rate and monthly payment would be for such an amount.
The rates and fee structures advertised for car loans are subject to fluctuate per the Fed rate. However, once you accept your loan agreement, a fixed-rate APR will guarantee your interest rate and monthly payment will remain consistent throughout the entire term of the loan. Your APR, monthly payment and loan amount depend on your credit history and creditworthiness. To take out a loan, many lenders will conduct a hard credit inquiry and request a full application, which could require proof of income, identity verification, proof of address and more.
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