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Loans

You can still get a car loan with bad credit — here are the best lenders to consider

CNBC Select evaluated credit requirements, repayment terms and other factors to find the best bad credit auto loans.

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A less-than-perfect credit score can be a barrier to favorable terms on financing products, including auto loans. Fortunately, even if your credit history has some blemishes (think scores below 670), you still have plenty of car loan options. 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.)

The best car loans for bad credit

Best for shopping around

MyAutoLoan

  • Annual Percentage Rate (APR)

    Starting at 4.01%

  • 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 for borrowers with bad credit who want to shop around for an auto loan to get the lowest rate possible. This online marketplace matches car shoppers with lenders based on their needs and the information they provide.

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.

The process is fast and convenient. To start, you'll need to fill out a quick confidential form. You can add a co-borrower or co-signer, which might help you get more favorable terms. You'll then receive up to four prequalified offers you can choose from. Prequalification doesn't impact your credit score, but the lender you'll decide to go with will place a hard inquiry on your credit once you apply.

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? If you're shopping for a used car and want your car-buying experience to take place entirely online, Carvana may be a good option for you.

Known for its vehicle vending machines, Carvana provides loans for cars from its inventory and works with customers of all credit types. You can also use a co-signer. As with other lenders on this list, you can prequalify without a hard credit inquiry to get estimated financing terms. However, while most lenders' prequalification offers are good for 30 days, Carvana gives you a much longer 45-day window.

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.

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 for drivers with bad credit who would rather get a car loan from a national bank to take advantage of competitive rates.

With Capital One Auto Finance, you can shop around for a new or used car using the bank's online Auto Navigator tool. 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. The bank also offers auto loan refinancing.

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.

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.

As the largest used-car retailer in the U.S., CarMax also provides financing for the cars it sells. You have the option to complete the entire process online. 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. You can also include a co-buyer which might help you get approved.

Further, CarMax offers a Three-Day Payoff program if you find a better loan offer within three days of closing your CarMax loan. For that reason, it pays to shop around for financing if you're going with CarMax — especially since its policy doesn't allow for price negotiation.

Best for refinancing

Autopay Car Loan

  • Annual Percentage Rate (APR)

    Starting at 2.99%

  • 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.

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.

You can prequalify with a soft credit inquiry and also have the option to add a co-applicant. Once pre-qualified, you can compare offers from multiple banks and credit unions to pick the best deal. If you decide to move forward, the lender will do a hard credit check and review your documents for final approval. This process might take up to two days.

FAQs

If you have bad credit, getting approved for a car loan without a co-signer can be more challenging — but it's still possible. There are lenders that 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.

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.

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.

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.

Bottom line

Bad credit can become a barrier to securing car financing. But don't fret — plenty of lenders work with customers with low credit scores. The key is to shop around for multiple loan offers to ensure you're getting the best deal possible. An interest rate that's just a few points lower can bring about significant savings over the life of the loan.

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

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 in accordance with 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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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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