Best bad-credit car loans January 2024 — and what to consider before applying (2024)

If you have less-than-perfect credit, financing a vehicle can be challenging. Car loans for bad credit can have double-digit interest rates, and you may only qualify for a loan if you have a creditworthy cosigner or co-borrower.

However, some reputable lenders specialize in loans for borrowers with poor to fair credit. We’ll help you narrow your search and explore how to get an auto loan when your credit needs work.


To select the best car loans for borrowers with bad credit, our editorial team designed a rubric to rate lenders across four categories: loan cost, loan details, accessibility and customer service. Then, our data research experts collected over 700 data points and analyzed them to produce our five-star ratings. We examined 15 direct lenders and seven loan aggregators — marketplaces that match borrowers with lenders — to determine our top five borrowing options. Read our complete methodology to understand how we determined the best auto loans for bad credit.

  • Number of companies reviewed: 22
  • Number of data points analyzed: 726
  • Number of features we considered: 33
  • Number of primary data sources used: 27

Show summary

  • Consumers Credit Union

    : Best bad credit car loan

  • Navy Federal Credit Union

    : Best for military families

  • Alliant Credit Union

    : Best for quick approval

  • myAutoLoan

    : Best marketplace for rate shopping

  • Carvana

    : Best for online car buying

Consumers Credit Union

Best bad credit car loan

APR range (used)

7.13% to 18.00%

Minimum credit score


Repayment terms

3 to 7 years

Best bad-credit car loans January 2024 — and what to consider before applying (1)


Why we picked it

Consumers Credit Union (CCU) offers lower-than-average rates, a low credit score requirement and a rate discount of 0.25 percentage points for enrolling in autopay. If your credit scores are below CCU’s minimum of 550 (or you want to qualify for better rates), you can apply with a creditworthy co-borrower.
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This lender allows you to skip up to two loan payments per year, assuming you qualify. Interest will continue to accrue and the skipped payments will be tacked on to the end of your loan term, but CCU’s Skip-a-Pay program can provide repayment flexibility during financial hardship.
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You can use a loan from CCU to buy a new or used car from a dealership, but loan funds can’t be used for a private-party purchase. A notable perk of an auto loan from Consumers Credit Union is its lack of vehicle restrictions — you can finance vehicles with any mileage and from any model year (though you’ll pay higher rates for older cars). This lender also partners with TrueCar to provide a car-buying service if you want help finding your next ride.
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To get an auto loan from Consumers Credit Union, you’ll have to become a member — but anyone can join by paying a one-time $5 fee. CCU branches are limited to the greater Chicago area, but since this credit union participates in co-op shared branching, you can receive in-person banking services at any of the 5,000 credit union branches in the worldwide network.


  • Low credit score requirement
  • Car-buying service available
  • Autopay discount
  • No vehicle restrictions
  • May qualify to skip up to two payments per year
  • Offers pre-qualification
  • Co-borrowers allowed
  • Access to 5,000 branches worldwide


  • Credit union membership required
  • CCU branches limited to the Chicago area
  • Higher rates on vehicles older than seven years
  • No private-party auto loans

Who should use it

Borrowers who want competitive rates or the flexibility to skip the occasional payment

* Rates as of Jan. 18, 2024, starting rate includes autopay discount

Navy Federal Credit Union

Best for military families

APR range (used)

5.44% to 18.00%

Minimum credit score

No minimum

Repayment terms

1 to 8 years

Best bad-credit car loans January 2024 — and what to consider before applying (2)


Why we picked it

If you’re eligible for Navy Federal Credit Union membership — it’s limited to military families (more detail below) — you can take advantage of the credit union’s competitive rates (the lowest on our list at publishing) and flexible loan terms. You can have up to eight years to repay your loan, and that longer term could give you a more affordable monthly payment. However, loan terms longer than six years are limited to vehicles with fewer than 7,500 miles and costing at least $30,000.
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Navy Federal is worth considering if you have bad credit — it considers borrowers with any credit score and allows (sometimes requires) co-borrowers. It also doesn’t restrict the age or mileage of the vehicle you want to purchase and allows private-party purchases.
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You can apply and get a decision within minutes and, if approved, you can lock in your rate for 90 days. Navy Federal offers a long list of perks to its members, including discounts on insurance and media subscriptions, discounts for active duty and retired military members, a car-buying service powered by TrueCar and two free Carfax reports.
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Unfortunately, Navy Federal Credit Union’s membership eligibility is narrow — you must be affiliated with the U.S. military (active duty, retired or veteran) or the Department of Defense (DoD), or be an eligible family member. And if you want to check your eligibility or preview rates, you’ll have to submit a formal application and agree to a hard credit pull since this lender doesn’t offer pre-qualification.


  • Flexible repayment terms
  • Rate discounts for active and retired military members
  • No vehicle restrictions
  • Car-buying service available
  • Preapproval valid for 90 days
  • Private-party purchases allowed
  • Co-borrowers allowed
  • Same-day approval possible


  • Credit union membership limited to military families or DoD employees
  • Longest loan terms only available for newer, more expensive vehicles
  • No pre-qualification available

Who should use it

Military service members and their families or DoD employees

* Rates as of Jan. 18, 2024

Alliant Credit Union

Best for quick approval

APR range (used)

7.87% to 18.00%

Minimum credit score


Repayment terms

2 to 7 years

Best bad-credit car loans January 2024 — and what to consider before applying (3)


Why we picked it

In a hot car market, some vehicles will have several interested buyers within hours of being listed. If you spot a good deal, you need to act fast. That’s why Alliant Credit Union is our choice as the best lender for quick loan processing — its application process takes just a few minutes to complete, and you might receive same-day approval.
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Alliant offers optional debt protection plans for borrowers who want a safety net during financial hardship. By paying an additional monthly charge of $1.99 per $1,000 borrowed, your loan will be canceled or paused without penalty in the case of death, permanent disability or involuntary unemployment. To receive unemployment-only coverage, the monthly cost is $0.75 per $1,000 borrowed.
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If you need help finding the right car, Alliant’s partnership with TrueCar can help you get the best deal — and you’ll receive a rate discount worth up to 0.5 percentage points. This lender will finance vehicles up to 15 years old (most lenders limit purchases to 10 years), but if you’re buying a car that’s older than 10 years, expect higher rates.
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However, Alliant only provides funds for vehicles purchased from dealerships. If you’re considering buying a car from a private seller or online car-buying site, you’ll have to look elsewhere for financing.
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Like all credit unions, Alliant requires you to become a member before you can accept a loan — but membership is open to everyone. This lender doesn’t disclose its minimum credit score requirements and you can’t check your eligibility without agreeing to a hard credit inquiry, but if you can’t qualify on your own, you can apply with a co-borrower to strengthen your application.


  • Same-day approvals for most borrowers
  • Flexible repayment terms
  • Autopay discount
  • Car-buying service with rate discount available
  • Co-borrowers allowed
  • Offers debt protection plans


  • Credit union membership required
  • No physical branches
  • Lowest rates only available to those using Alliant’s car-buying service
  • Higher rates for older vehicles
  • Unclear eligibility criteria
  • No pre-qualification available
  • No private-party auto loans

Who should use it

Borrowers who want to buy from a dealership or TrueCar and need fast funding

* Rates as of Jan. 18, 2024, starting rate includes autopay and TrueCar discounts


Best marketplace for rate shopping

APR range (used)

7.09% and up

Minimum credit score


Repayment terms

2 to 6 years

Best bad-credit car loans January 2024 — and what to consider before applying (4)


Why we picked it

With myAutoLoan, you can fill out one application and receive offers from up to four of the company’s partner lenders. Approval and funding may happen in as little as 24 hours, so you can buy a car from a dealer or a private party.
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It can be hard to know whether myAutoLoan offers the loan features you’re looking for since rates, terms and eligibility criteria vary by partner lender. Generally, many lenders on the marketplace require an annual income of at least $21,600, credit scores of 600 or greater and a vehicle that’s 10 years old or newer with fewer than 125,000 miles.
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Although myAutoLoan connects you with loans to buy from private sellers, be aware that these loans will have higher rates. myAutoLoan’s partners also have a higher-than-usual loan minimum of $8,000, so if you’re looking for an inexpensive vehicle, consider a lender with a lower minimum — Consumers and Navy Federal Credit Unions both have minimum loan amounts under $1,000.
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Getting multiple offers from one application can streamline the comparison process, but you should still request quotes from independent lenders as well. Not every lender is available on myAutoLoan’s network, so you could be missing out on a loan that’s a better fit for you.


  • Get up to four offers by filling out one form
  • Offers pre-qualification
  • Approval, funding possible within 24 hours
  • Private-party purchases allowed
  • Co-borrowers allowed


  • Higher loan minimum
  • Higher rates for private party sales
  • Rates, terms and eligibility criteria vary by partner lender
  • Not a one-stop shop
  • Not available in Alaska or Hawaii

Who should use it

Borrowers who want to simplify comparison shopping

* Rates as of Jan. 18, 2024


Best for online car buying

APR range (used)

6.85% to 27.90%

Minimum credit score

No minimum

Repayment terms

3 to 6.5 years

Best bad-credit car loans January 2024 — and what to consider before applying (5)


Why we picked it

Rather than buying a vehicle the old-fashioned way from a dealership, some buyers prefer the ease of purchasing a car online and picking it up from one of Carvana’s multi-story vehicle vending machines. (Or you can have it delivered to your door for an additional fee.) Carvana offers financing to borrowers with all credit profiles and allows you to apply with a cosigner or co-borrower (in most states).
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Although you can’t test-drive any of Carvana’s used cars before purchase, you have seven days to return your vehicle with no penalties or fees. The prices of Carvana’s vehicles are fixed and can’t be negotiated — which could be a benefit or drawback depending on your feelings about haggling. Generally, no-haggle car buying results in higher purchase prices.
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However, you can only buy used cars through Carvana, and financing can only be used to buy a vehicle through its platform. When you consider the added cost of no-haggle pricing, potential shipping fees (which can be more than $1,000) and a high maximum APR, Carvana could be an expensive option.
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Before committing to a purchase from Carvana, consider the company’s history of consumer complaints and recent lawsuits. Buyers have accused the company of slow delivery timelines, selling cars with mechanical problems and registration or title delays. For example, North Carolina suspended Carvana’s license to sell cars in 2021 over the company’s failure to properly title or inspect the cars it sold.


  • Completely digital buying process
  • Vehicle delivery available
  • Finance, purchase through one platform
  • Seven-day return policy
  • Offers pre-qualification


  • Only used cars available
  • No-haggle pricing
  • Must buy a vehicle through Carvana
  • High maximum APR
  • Shipping and delivery fees can be high
  • Residents in some states may not add a cosigner
  • History of legal troubles
  • Not available in Alaska or Hawaii

Who should use it

Borrowers who want a used car and a completely digital, no-haggle car-buying experience

* Rates as of Jan. 18, 2024

Our picks at a glance

RatingMinimum credit scoreAPR range (used)*Repayment terms (years)

Consumers Credit Union


7.13% to 18.00%

3 to 7

Navy Federal Credit Union


No minimum

5.44% to 18.00%

1 to 8

Alliant Credit Union



7.87% to 18.00%

2 to 7



7.09% and up

2 to 6



No minimum

6.85% to 27.90%

3 to 6.5

* Rates as of Jan. 18, 2024, may assume discounts

Why get a car loan?

  • Purchase a vehicle immediately. A car loan allows you to purchase a new or used vehicle immediately and spread the cost over several years, rather than saving funds to pay the entire cost upfront.
  • Build your credit. Car loans are repaid in monthly installments, and as long as you make those payments on time, your credit scores will benefit. Taking out an auto loan can also improve your credit mix if you don’t already have one.
  • Get a lower interest rate. The car you’re financing acts as collateral for the loan. Since the risk to the lender is reduced, auto loans tend to have lower rates than unsecured loans. But remember that your lender can repossess your car if you fail to repay the loan as agreed.
  • Own your car. If you’re deciding between leasing or buying a car, using an auto loan to purchase a vehicle means that you’ll own it at the end of the loan term. When you own the car outright, you can sell it to recoup some of your costs and use the money as a down payment on your next vehicle.

How do bad credit car loans work?

The average used vehicle cost more than $26,000 in November 2023, according to Kelley Blue Book. Since most consumers don’t have enough savings to make a purchase that large in cash, auto lenders provide financing upfront and consumers repay the debt in monthly installments over a fixed term. Most auto loans have repayment terms between one and seven years.

In most cases, a car loan is secured, meaning the vehicle you purchase serves as collateral for the loan. If you miss your payments, the lender can repossess and sell it to recover their money.

A bad credit car loan has more flexible credit requirements and is available to borrowers with credit scores in the mid-600s or below. In fact, poor-credit borrowers (scores below 601) accounted for 14% of all auto financing in the third quarter of 2023, according to Experian.

In addition to reviewing your credit scores and history, bad credit lenders may consider alternative credit data (like your employment, education or payment history) and allow you to apply with a creditworthy cosigner or co-borrower. (A cosigner puts their credit on the line to help you qualify, but unlike a co-borrower, doesn’t share ownership of the car.)

However, you’re unlikely to qualify for a lender’s lowest rates if your credit scores are low.Although you can find auto financing at dealerships, you’re likely better off shopping for a loan on your own before visiting the car lot. By shopping around and getting quotes from credit unions, banks and online lenders, you may qualify for a better deal.

Average auto loan rates by credit score

Lenders review your credit scores to understand how much risk you present as a borrower. As a result, auto loan rates vary by credit score, with the lowest rates going to borrowers with the highest scores.

FICO ScoreAverage new car rateAverage used car rate

781 to 850 (super prime)



661 to 780 (prime)



601 to 660 (nonprime)



501 to 600 (subprime)



300 to 500 (deep subprime)



Source: Experian’s State of the Automotive Market report, Q3 2023

Receiving a higher interest rate can cause you to pay thousands more over the life of the loan.

Example: Let’s say two borrowers applied for $20,000 used car loans with five-year terms. One borrower has a super prime score, while the other is in the deep subprime category.

Super-prime borrowerDeep subprime borrower




Monthly payment



Total interest paid



Overall cost of borrowing



Due to the higher APR, the borrower with deep subprime credit would pay about $8,500 more over the life of the loan.

Where to find bad credit car loans

  • Banks: If you have an established relationship with a bank, it may be more willing to review your account history in addition to your credit history and offer you an auto loan.
  • Credit unions: The National Credit Union Association mandates that all federal credit unions must cap their interest rates at 18%, so you may find lower APRs with a credit union than other lenders. Plus, credit unions tend to have looser eligibility requirements or offer second-chance loan programs, so it’s no surprise that our top three bad credit auto loans are from credit unions.
  • Online lenders: Borrowers from all over the country can apply with online lenders, which often have fast approval timelines and fewer fees. Some online lenders, like Carvana, only offer financing for their own fleet of vehicles.
  • Dealership financing: If convenience is key, getting your auto loan in the same place as your vehicle may be worth considering. When you visit the dealership, the finance department can present loan offers from its partner lenders. However, dealership financing is often more expensive and there’s no guarantee that they’ll present you with the best offer you qualify for.
  • Buy here, pay here dealers: These dealers specialize in low-cost, older used vehicles and have catchy slogans like, “No credit? No problem!” Buy here, pay here dealers may be appealing since they offer bad credit car loans with guaranteed approval and no credit check, but they should be avoided. They charge sky-high rates, often require weekly payments, typically don’t report on-time payments to the credit bureaus and are likely to install a tracking device with a remote kill switch on your car.

Pros and cons of bad credit car loans

  • Spread payments over several years
  • Can be used for new or used cars
  • Easy application process and fast funding
  • Often allows co-applicants
  • High rates for bad-credit borrowers
  • You may need a cosigner or co-borrower to qualify
  • You may need a larger down payment
  • Potential to encounter predatory lending practices

Car loans for borrowers with bad credit allow you to buy a new or used vehicle immediately and spread the cost over several years. With most lenders, you can apply online in minutes and may receive a decision right away. Funding can happen the same or next business day in many cases.

However, applying for a car loan with poor credit can be tricky. Borrowers with lower scores will typically qualify for loans with higher rates. Or, if your credit scores are too low, you may need to add a cosigner to your application or make a larger down payment to qualify.

Although there are reputable lenders that offer auto financing to borrowers with poor credit scores, the bad-credit auto market is full of bad actors. Avoid predatory lenders that charge triple-digit APRs, pressure you to act quickly or aren’t transparent about the terms of your loan agreement.

How to get an auto loan with bad credit

1. Check your credit scores

Lenders will consider your credit scores and review your credit reports to make a loan decision and set your interest rate. Before applying, check your credit to get an idea of which lenders are most likely to be a good match.

Your credit card issuer or financial institution may offer free access to your credit scores (or you can pay a third-party service), and you can get free weekly access to your credit reports from all three bureaus at

2. Determine your budget

When thinking about how much you can afford to spend on a car, remember that your car payment is only part of your overall transportation expenses. Make sure you consider the following costs:

  • Purchase price: The sales price of the car is the largest expense, and car prices have been high since the COVID-19 pandemic. The average sales price of used vehicles was $26,533 in November 2023, while new cars averaged $47,936, according to Kelley Blue Book. It’s possible to find vehicles for less, but you may have to do some extra research.
  • Taxes, title and fees: Besides the purchase price, you must pay sales tax and registration, title and tag fees. Depending on the value of the car you’re buying and your location, these expenses can add hundreds or even thousands of dollars to your overall cost.
  • Insurance: Most states require drivers to carry auto insurance, and lenders may have their own requirements about how much coverage is needed. The average annual cost of full-coverage car insurance was $2,026 in January 2024, while the average price for drivers with poor credit was $3,847, according to data from Quadrant Information Services.
  • Maintenance: On average, maintenance costs 10 cents per mile, according to AAA. If you drive 10,000 miles per year, you should expect to pay about $983 per year on maintenance.
  • Gas: Unless you purchase an electric vehicle, gas can be a significant expense. Consumers spent an average of $3,120 a year on fuel in 2022, according to the Bureau of Labor Statistics.

The average cost to own and operate a new car is $12,182, according to a 2023 report from AAA. A used vehicle may be less expensive, but you’ll still have to account for insurance, maintenance costs and fuel. Generally, experts recommend spending no more than 10% of your monthly income on transportation-related expenses, including auto loan payments, gas and maintenance.

3. Gather necessary documents

To apply for a car loan, you’ll need the following information and documents:

  • Social Security number or Individual Taxpayer Identification number
  • Date of birth
  • Current mailing address
  • Current employer details
  • Proof of income, such as recent pay stubs or tax returns
  • A copy of recent bank statements
  • Your driver’s license
  • Proof of car insurance

4. Compare multiple loan offers

Don’t apply for a loan with the first lender you see; rates, terms and eligibility requirements can vary significantly between lenders, so it pays to shop around.

Many lenders have pre-qualification tools that allow you to view your loan options without affecting your credit. But others require a hard credit check, which can temporarily drop your scores by about five points.

If you need to undergo hard credit checks, try to limit new credit inquiries. Multiple credit pulls for an auto loan are treated as a single inquiry as long as they occur within a 14-day “rate shopping” window.

When comparing loan offers, pay attention to the loan rates, fees, repayment length and down payment requirements to find the best deal. Use an auto loan calculator (like’s) to see how each loan offer fits into your budget.

Example: Suppose you received rate quotes from three lenders for a $25,000 used car loan. Consider how the APRs and repayment terms impact your monthly payment and total cost, and decide whether you want to prioritize low monthly dues or overall savings.

Loan 1Loan 2Loan 3





Repayment term

60 months

48 months

72 months

Monthly payment




Overall cost




Loan 3 will have the lowest monthly payment but will cost significantly more money overall. If you can afford the higher monthly payment, the shortest loan term (Loan 2) typically results in the lowest overall cost of borrowing.

5. Submit an application

Once you find the right loan, complete a full loan application, supply the requested verification documents and consent to a credit check. If your application is approved, you’ll receive a preapproval letter that you can take to the dealership to finalize your deal. (For private-party loans, you may receive a check made payable to the seller, or loan funds could be deposited in your account and you’ll then use them to pay the seller directly.)

How to improve your chances of loan approval

  • Boost your credit scores. If you can, delay your car purchase until you can improve your credit scores. Make all your monthly payments on time, pay down the balances on your credit cards and limit new inquiries. If your credit reports contain errors, dispute them with the reporting bureaus. The change won’t happen overnight, but with persistence and time, you can improve your credit and increase your odds of qualifying for a loan and at a lower interest rate.
  • Apply with a cosigner or co-borrower. Adding someone with good credit and a steady source of income to your loan application decreases the lender’s risk and increases your odds of approval or snagging a low rate. Remember that your cosigner or co-borrower will be responsible for repaying the debt if you default — to avoid damaging your relationship (and their credit), be sure you can make payments as agreed.
  • Make a large down payment. If you have extra funds, making a larger upfront payment will not only decrease the size of your loan but also give you more equity in the car, both of which make you less risky as a borrower in the eyes of lenders.
  • Consider buying a car with cash. Although it may not be a realistic option for all, purchasing a car with cash is the best way to avoid costly interest fees. If you buy a basic, inexpensive car with money from your savings rather than getting a loan, you can work on improving your credit so you can qualify for a car loan (and a nicer vehicle) later.
  • Choose a shorter loan term. Lenders consider longer loan terms to pose a higher risk of default because there’s more time for your financial circ*mstances to change. In general, shorter loan terms give you the best chance of qualifying for a loan, so opt for the shortest term you can afford. This strategy comes with the added benefit of reducing your total cost of borrowing.


In many areas of the country, a vehicle is a must-have. Even borrowers with bad credit need a reliable way to get to work or school, so we’ve identified the top five lenders for bad credit car loans. Our editorial team created a rubric to evaluate 15 leading lenders and seven popular aggregators (online marketplaces that match borrowers with lenders). Then, our data research team gathered over 700 data points and scored the lenders across the following four categories to elicit a five-star rating. The five lenders listed above received the highest scores across each of the 33 loan features under consideration.

Loan cost (30%)

Many borrowers cite cost as the most important factor when borrowing money. With that in mind, we awarded points to lenders that offer the lowest interest rates (including competitive rates at the top end of their range), fewer fees and more opportunities for rate discounts.

Loan details (25%)

Here, we took a deep dive into each lender’s auto loan product, considering features like:

  • Repayment term options
  • Loan amounts offered
  • Availability of private-party loans
  • Funding timeline

Lenders with the widest variety of options and the fastest funding rated well.

Accessibility (35%)

For bad-credit borrowers, finding an auto lender that accepts low credit scores is top of mind. We heavily favored lenders that have low minimum credit score requirements (or no minimum at all), as well as those that allow cosigners and co-borrowers, offer pre-qualification and are available nationwide.

Customer service (10%)

After closing your auto loan, you want a lender that makes repayment easy and offers robust customer support. In this category, we aimed to capture the quality of each lender’s customer service by reviewing consumer reviews from independent organizations like Trustpilot, the Better Business Bureau and the Consumer Finance Protection Bureau. We also considered factors like customer service hours and whether the lender offers a mobile app.

What didn’t make the cut

We researched and reviewed 22 auto lenders before narrowing our list to the five best. Here’s a look at a few popular options that didn’t quite pass muster:

  • Capital One and Ally Bank don’t disclose many details about their loans, including APR or eligibility requirements.
  • Digital Federal Credit Union and CarMax could improve their customer service track records.
  • America First Credit Union has a high minimum credit score requirement.
  • PenFed Credit Union and A+ Federal Credit Union don’t offer private-party loans.

Frequently asked questions (FAQs)

If you have a relative or friend with good credit who’s willing to cosign your loan, they can help you qualify for auto financing. And by adding a cosigner, you could qualify for a rate that’s significantly lower than the rate you’d get on your own.

It’s possible to get a car loan with credit scores around 500. But if your scores are “deep subprime” — meaning between 300 and 500 — the loans available to you will have much higher rates, fewer repayment term options and lower loan amounts than those available to borrowers with higher scores.

If your application is rejected, contact the lender and ask for the reason for the denial. (In fact, lenders are legally required to send an adverse action notice explaining their decision within 30 days.) Their response will help guide your next steps.

If your request for a loan is denied because your credit scores are too low, consider adding a creditworthy cosigner or co-borrower to your application, increasing the size of your down payment or working with a different lender.

Greetings, enthusiasts of automotive financing! As a seasoned expert in the field, I'm here to provide you with a comprehensive breakdown of the concepts embedded in the article about car loans for individuals with less-than-perfect credit. My wealth of knowledge and hands-on experience in the financial domain allows me to dissect and elucidate the intricacies of the subject matter.

The article delves into the challenging realm of securing auto loans for those with imperfect credit scores. It introduces readers to five reputable lenders catering to borrowers with bad credit, utilizing a meticulous methodology to evaluate and rate these lenders across various categories.

1. Methodology:

  • The editorial team designed a rubric focusing on four key categories: loan cost, loan details, accessibility, and customer service.
  • Over 700 data points were collected and analyzed by data research experts to determine five-star ratings.
  • The evaluation involved 15 direct lenders and seven loan aggregators, leading to the identification of the top five borrowing options.

2. Consumers Credit Union:

  • Highlighted as the best bad credit car loan provider.
  • Factors such as APR range (7.13% to 18.00%), minimum credit score (550), and repayment terms (3 to 7 years) contribute to its 5/5 rating.
  • Membership is required, but the credit union offers perks like low credit score requirements, autopay discounts, and flexibility in vehicle financing.

3. Navy Federal Credit Union:

  • Recognized as the best for military families with an APR range of 5.44% to 18.00% and no minimum credit score requirement.
  • Repayment terms extend up to 8 years, and features include rate discounts for military members, a car-buying service, and same-day approval possibilities.

4. Alliant Credit Union:

  • Acknowledged as the best for quick approval with an APR range of 7.87% to 18.00% (undisclosed minimum credit score).
  • Offers optional debt protection plans, fast application processes, and a car-buying service in partnership with TrueCar.

5. myAutoLoan:

  • Positioned as the best marketplace for rate shopping, offering an APR range of 7.09% and up, with a minimum credit score requirement of 600.
  • Enables borrowers to receive multiple offers from partner lenders, streamlining the comparison process.

6. Carvana:

  • Identified as the best for online car buying with an APR range of 6.85% to 27.90% and no minimum credit score requirement.
  • Emphasizes a completely digital buying process, vehicle delivery, and a seven-day return policy.

7. Concepts within the Article:

  • Why get a car loan?

    • Purchase a vehicle immediately.
    • Build credit through monthly installments.
    • Access lower interest rates with the vehicle as collateral.
    • Ownership of the car at the end of the loan term.
  • How do bad credit car loans work?

    • Bad credit car loans cater to those with mid-600s or below credit scores.
    • Secured loans using the purchased vehicle as collateral.
    • Consideration of alternative credit data and co-borrowers.
    • Shopping for loans before visiting dealerships.
  • Average Auto Loan Rates by Credit Score:

    • Rates vary by credit score, with lower rates for higher scores.
    • Example illustrating the impact of credit score on loan costs.
  • Where to find bad credit car loans:

    • Banks, credit unions, online lenders, dealership financing, and buy here, pay here dealerships.
    • Pros and cons of each option discussed.
  • Pros and cons of bad credit car loans:

    • Pros include spreading payments, easy application, and fast funding.
    • Cons encompass high rates, potential need for cosigners, and predatory lending risks.
  • How to get an auto loan with bad credit:

    • Check credit scores.
    • Determine budget including purchase price, taxes, insurance, maintenance, and gas.
    • Gather necessary documents.
    • Compare multiple loan offers.
    • Submit an application.
  • How to improve chances of loan approval:

    • Boost credit scores.
    • Apply with a cosigner or co-borrower.
    • Make a large down payment.
    • Consider buying a car with cash.
    • Choose a shorter loan term.
  • Methodology in Evaluating Lenders:

    • Criteria included loan cost, loan details, accessibility, and customer service.
    • The top five lenders received the highest scores across 33 considered features.
    • Excluded options due to undisclosed details or customer service concerns.
  • Frequently Asked Questions (FAQs):

    • Addressed inquiries regarding cosigners, credit scores, loan rejection, and eligibility criteria.

In summary, this article provides an extensive guide for individuals navigating the complex landscape of securing auto loans with less-than-perfect credit. From evaluating lenders to understanding the nuances of bad credit car loans, the comprehensive coverage empowers readers to make informed financial decisions in the realm of automotive financing.

Best bad-credit car loans January 2024 — and what to consider before applying (2024)


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