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7 Bad Credit Auto Loans of 2024

Learn about bad-credit car loans and where to apply for one.

Last updated on July 3, 2024
Written by 
NerdWallet
Julie Myhre-Nunes
Edited by 
Julie Myhre-Nunes
Assigning Editor
Fact Checked
NerdWallet
Written by 
Julie Myhre-Nunes
Edited by 
Julie Myhre-Nunes
Assigning Editor
Fact Checked

Many, or all, of the products featured on this page are from our advertising partners who compensate us when you take certain actions on our website or click to take an action on their website. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.

  • 45+ auto loan products reviewed and rated by our team of experts.
  • 30+ years of combined experience covering financial topics.
  • Objective, comprehensive star rating system assessing 4 categories and 60+ data points across direct lenders and aggregators.
  • Governed by NerdWallet's strict guidelines for editorial integrity.
NerdWallet's auto loans content, including articles, reviews and recommendations, is produced by a team of writers and editors who specialize in consumer lending. Their work has appeared in Nasdaq, MSN, MarketWatch, Yahoo! Finance and other national and regional media outlets. They have also appeared on NerdWallet's "Smart Money" podcast.

Bad Credit Auto Loans

Lender
NerdWallet Rating
Est. APR
Loan amount
Min. credit score
Learn more
Auto Credit Express

Auto Credit Express - Used car purchase loan

Learn more
on Auto Credit Express' website
on Auto Credit Express' website
View details
Not yet ratedBest for Finding car dealers with subprime lending
Online application

N/A

$5,000-$50,000

525

MyAutoloan

MyAutoloan - Used car purchase loan

Soft credit check
Rate discount

7.49-35.72%

$8,000-$100,000

600

MyAutoloan

MyAutoloan - New car purchase loan

4.0
/5
Best for New car loan aggregators
Soft credit check
Rate discount

6.94-35.47%

$8,000-$100,000

600

Our pick for

Finding car dealers with subprime lending

Auto Credit Express does not make loans itself, and it did not answer many of the questions we ask of loan aggregators, so it has not received a star rating. But it is worth noting here that this provider will try to match car buyers with low credit scores, bankruptcies or repossessions to dealers who may be able to arrange financing.

Auto Credit Express
Learn more
on Auto Credit Express' website
on Auto Credit Express' website
Auto Credit Express

Auto Credit Express - Used car purchase loan

Not yet rated
Est. APR

N/A

Loan amount

$5,000-$50,000

Min. credit score

525

Our pick for

Used car loan aggregators

Aggregators connect prospective borrowers with a network of auto lenders, usually resulting in more than one loan offer. We evaluate them using different criteria than direct lenders.

MyAutoloan

MyAutoloan - Used car purchase loan

4.0
Est. APR

7.49-35.72%

Loan amount

$8,000-$100,000

Min. credit score

600

Our pick for

New car loan aggregators

Aggregators connect prospective borrowers with a network of auto lenders, usually resulting in more than one loan offer. We evaluate them using different criteria than direct lenders.

MyAutoloan

MyAutoloan - New car purchase loan

Est. APR

6.94-35.47%

Loan amount

$8,000-$100,000

Min. credit score

600

Our pick for

Used car direct lenders

Direct lenders are banks, credit unions and other companies that work directly with a borrower to make and service loans. We evaluate them using different criteria than aggregators.

Carvana

Carvana - Used car purchase loan

Est. APR

7.95-27.95%

Loan amount

$1,000-$125,000

Min. credit score

None

CarMax

CarMax - Used car purchase loan

Est. APR

5.74-27.90%

Loan amount

$500-$100,000

Min. credit score

None

Want to compare more options? Here are our other top picks:

  • Digital Federal Credit Union - Used car purchase loan
  • Digital Federal Credit Union - New car purchase loan

What is bad credit for an auto loan?

A bad credit score for a car loan is generally defined as in the mid-600s or below. VantageScore and FICO are the two most commonly used credit scoring models, and their scoring tiers differ. Also, some auto lenders use a slightly different FICO model specific to the auto industry.

When deciding whether to approve an auto loan, lenders do consider factors in addition to credit score — such as payment history, steady income, length of employment, amount of debt and loan amount. So, if your credit score falls into the “bad” tier or lower, it’s still possible to get approved for a car loan when other factors are in your favor. You may find more restrictions though, for example a lender may require a shorter loan term.

About 15% of people who financed or leased a car in 2023 had credit scores below 601, according to credit reporting company Experian.

Types of lenders that offer car loans for bad credit

Many different types of lenders offer bad-credit car loans. When you have bad credit, it’s especially important to apply to more than one lender. Lender requirements vary, and one may be more willing to work with you than another. Also, having multiple loan offers later enables you to take the lowest-rate one to the dealership and ask the finance office to try to beat it.

Banks and credit unions, known as direct lenders, are a good place to start. If you already have accounts in good standing there, they may be more willing to work with you. Direct lenders can be 100% online or have physical locations.

Online loan marketplaces that work with a network of lenders are another option. They provide the convenience of applying to multiple lenders with one loan application.

Online car retailers, such as Carvana, also offer financing for bad-credit borrowers.

Auto dealerships also offer access to bad-credit auto loans. This is where most people find their loans. Finance officers there often have long-standing relationships with banks and credit unions and make either a flat fee or a percentage of the amount borrowed. They also have the ability to adjust interest rates within a lender's guidelines. That's why it’s best to bring your lowest-rate offer from another lender to the table.

Some dealers offer their own in-house financing for bad-credit customers, and borrowers make payments directly to the dealer. These dealerships may advertise "no credit check" or "buy here, pay here." Buy here, pay here loans are typically the most expensive way to finance a car.

Comparing lenders that offer bad-credit car loans

Instead of applying to a random lender, crossing your fingers and hoping you get approved, look first to see if a certain lender makes more sense for you.

For example, not all lenders allow co-signers. So if you think you may need one to qualify for a loan, apply only to lenders that accept co-signers. If you have a limited credit history, or none at all, look for lenders without a credit history requirement.

If one of your goals is to build your credit with an auto loan, ask if the lender reports payments to one or more of the three major credit bureaus — TransUnion, Experian and Equifax. That way, your record of on-time car payments will be available to future lenders.

To compare lenders and rates in a way that won’t affect your already low credit score, look for lenders that allow you to pre-qualify for a loan with a soft credit check. Pre-qualification is also a good way to determine if you will qualify for an auto loan at all.

If you do receive pre-qualified offers and want to compare them, NerdWallet’s auto loan calculator is a helpful tool. You can input the estimated rates lenders have given you, add in down payment or trade-in amount, and see your resulting monthly payment as well as total loan cost.

Borrowers tend to pay more for car loans with bad credit

Lenders charge higher interest rates, and sometimes more in fees, for a car loan with bad credit. They do this to compensate for the added risk that a borrower may not pay off the loan.

Typically, a borrower with bad credit can expect to pay a lot more for a car loan. For example, on a $30,000, 60-month new-car loan, the difference in payments between borrowers in the highest and lowest credit tiers would be nearly $9,000 over the life of the loan.

So you have an idea of what rates to expect for bad-credit auto loans, here are average auto loan rates by credit score based on VantageScore.

Credit score

Average APR, new car

Average APR, used car

Superprime: 781-850.

5.25%.

7.13%.

Prime: 661-780.

6.87%.

9.36%.

Nonprime: 601-660.

9.83%.

13.92%.

Subprime: 501-600.

13.18%.

18.86%.

Deep subprime: 300-500.

15.77%.

21.55%.

Source: Experian Information Solutions, 2nd quarter 2024.

Improving your chances of getting a car loan with bad credit

If you’re concerned you can't get auto loan approval, there are steps you can take to improve your chances of getting an auto loan with bad credit.

Actually, it’s likely that you will find a lender willing to approve a loan for you, regardless of your credit score. Some lenders make loans only to people with bad credit, but usually with a very high rate. The key is to find the lender with the lowest rate possible and a payment you can afford, so you can buy the car you need, make payments on time and build your credit.

If you find your only option is to settle for a high interest rate, then commit to making your payments on time and look into refinancing your car loan at a lower rate as soon as you can.

Last updated on July 3, 2024

Methodology

NerdWallet's review process surveys companies that offer any combination of new car purchase loans, used car purchase loans, auto refinance loans (traditional and/or cash-out) and lease buyout loans. These companies include direct lenders and aggregators; the latter group doesn't have in-house loan products but matches borrowers to third-party lenders within a network. Our aim is to provide an independent assessment of providers to help arm you with information to make sound, informed judgements on which ones will best meet your needs. We adhere to strict guidelines for editorial integrity.

Our survey for direct lenders has different questions than the survey for aggregators, but each includes more than 60 data points. NerdWallet independently confirms product details and, when necessary, follows up with company representatives. At least two writers and an editor verify the facts for every lender review to ensure data are accurate.

To receive a star rating, a provider must respond to NerdWallet’s annual auto loans survey. Star ratings are then assessed from poor (one star) to excellent (five stars).

For more details about the categories considered and our processes, read our full methodology for rating direct lenders and our full methodology for rating aggregators.

To recap our selections...

NerdWallet's Bad Credit Auto Loans of 2024

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