Car Loan For Bad Credit

Securing a car loan with poor credit can pose difficulties, yet there exist lenders who cater specifically to individuals with lower credit standings.


To assist in your search, we’ve assessed various car loan options tailored for bad credit. Certain lenders permit joint applications with a co-applicant and may provide incentives like reduced interest rates or the option for prequalification.

Good for people who have filed for bankruptcy: Prestige Financial

Bankruptcies can significantly impact credit scores, potentially hindering eligibility for auto loans. However, Prestige Financial reviews applications from individuals who have undergone bankruptcy proceedings. It’s essential to note that for Chapter 7 bankruptcy applicants, their bankruptcy documents must be accessible for review on the court website. Meanwhile, Chapter 13 bankruptcy applicants need their repayment plan approved for consideration.


Here are further insights into Prestige Financial auto loans:

Interest Rate Reduction Program: Prestige Financial extends an interest rate reduction program to eligible borrowers who consistently make timely payments. Qualified applicants may enjoy a potential rate reduction of up to 0.5% every three months, up to a maximum of 2% annually. However, it’s important to acknowledge that the lowest achievable annual percentage rate (APR) is 14%, which remains relatively high.

Joint Applications Permitted: Prestige Financial accepts both individual and joint applications. Collaborating with a co-borrower possessing good credit can enhance your chances of approval or secure a lower interest rate, given shared responsibility for monthly payments. Notably, Prestige Financial does not accommodate co-signers who are solely liable in the event of default.


Income Requirements: For individual applicants, a minimum income of $2,250 is required, while joint applicants must earn at least $2,750. Self-employment income is not factored into Prestige Financial’s assessment of loan repayment capability.

Good for a range of refinance options: Autopay

Autopay distinguishes itself by offering a diverse array of auto loans, encompassing financing options for both new and used vehicles, along with various refinancing choices such as traditional, cash back, and lease buyout refinancing.

Here’s further insight into Autopay auto loans:


Multiple Offers:

Autopay operates as an online marketplace, connecting individuals with multiple auto lenders. This platform affords the opportunity to receive loan offers from more than one lender, broadening the scope of available options.

Prequalification Capability:

Prospective borrowers can apply for prequalification, allowing them to assess estimated rates and loan terms without impacting their credit scores. It’s important to note that while prequalification provides insight, it does not guarantee approval or specific terms. Final terms are determined upon submission of a formal loan application, potentially resulting in a hard credit inquiry.

Wide Range of Loan Amounts:

Autopay facilitates loans ranging from $2,500 to $100,000, with loan terms spanning from 24 to 96 months. It’s essential to recognize that while opting for a longer loan term can reduce monthly payments, it may entail paying more in interest over time.

Additional Products:

In addition to loans, Autopay offers supplementary products such as vehicle service contracts and guaranteed asset protection insurance for an additional fee. Gap insurance, for instance, can be beneficial in scenarios where a vehicle is stolen or totaled in an accident, covering the disparity between the vehicle’s current value and the outstanding loan amount.


Autopay provides the option to apply for loans with a co-applicant, facilitating joint applications for increased eligibility or favorable terms.

Good for interest rate discounts: Digital Federal Credit Union

Digital Federal Credit Union (DCU) distinguishes itself by offering enticing discounts to its members, including a 0.5% discount for eligible checking account holders who maintain electronic payments and a 0.25% discount for owners of energy-efficient vehicles.

Here’s further insight into Digital Federal Credit Union’s auto loan offerings:


To secure financing, individuals must be members of Digital Federal Credit Union. Non-members can join specified nonprofit organizations for as little as $10, rendering them eligible for loan approval.

Loan Variety:

DCU provides a range of auto loans catering to different needs, including financing for new and used cars (purchased from dealers or private parties), classic/antique cars, mobility vehicles, lease buyouts, and refinancing options.

Uniform Interest Rates:

APRs offered by DCU are determined by credit history and loan term, with consistent rates applied to both new and used car loans, as well as refinance loans.

Co-Borrower Inclusion:

Digital Federal Credit Union allows applicants to add co-borrowers, enhancing eligibility or securing more favorable terms through joint applications.

Flexible Loan Terms:

DCU offers flexible loan terms, extending up to 84 months for new and used car purchases and refinancing. Additionally, Digital Federal Credit Union permits financing up to 130% of the vehicle’s retail value, providing borrowers with greater financial flexibility.

Good for one-stop shopping: Carvana

Carvana is renowned for its unique approach to car buying, featuring a network of vending machines where customers can collect their purchased vehicles. Notably, Carvana offers the convenience of shopping for both financing and a car in a single location.

Here are further insights into Carvana’s services:

Single Loan Type:

Carvana exclusively provides loans to finance its existing inventory of used cars. If you seek alternative financing options or prefer not to be limited to Carvana’s inventory, you’ll need to explore other lenders.

Prequalification Capability:

Carvana offers a prequalification process enabling applicants to view estimated rates and terms they might qualify for without impacting their credit scores. These prequalification offers remain valid for 30 days, allowing ample time for decision-making.

Eligibility Criteria:

To qualify for Carvana’s financing, applicants must have a minimum annual income of $5,100 and must not have any active bankruptcies.

Limited Co-Signer Acceptance:

While Carvana permits co-signers in select states, it’s essential to verify eligibility for co-signing with Carvana in your state if you intend to apply with one.

Good for prequalification: Capital One Auto Finance

Capital One Auto Finance sets itself apart by offering the option to prequalify for an auto loan without triggering a hard credit inquiry, which could potentially impact your credit scores.

By applying for prequalification with Capital One Auto Finance, you can assess your estimated loan rate and term without any adverse effects on your credit scores. However, final approval and loan terms are determined upon submission of a full application.

Here’s further information about Capital One Auto Finance:

Loan Variety:

Capital One Auto Finance provides loans for new or used cars purchased from a dealer, as well as options for refinancing existing auto loans from other lenders.

Loan Amounts:

The minimum loan amount offered by Capital One Auto Finance is $4,000, with the maximum amount contingent upon factors such as credit history, income, and other relevant criteria.

Dealership Restrictions:

Loans from Capital One Auto Finance must be utilized at one of the company’s 12,000 participating car dealerships.

Eligibility Criteria:

To qualify for a loan with Capital One Auto Finance, applicants must be at least 18 years old, reside in the contiguous United States, and have a minimum monthly income of $1,500.

Online Car Shopping:

Capital One Auto Finance offers the Auto Navigator tool, allowing customers to search for vehicles that suit their needs while simultaneously exploring financing options.

Good for unemployed people: Credit Acceptance Corp.

Credit Acceptance Corp. distinguishes itself by specializing in providing auto loans to individuals who have encountered financial difficulties, including those receiving unemployment income.

Here are further insights into Credit Acceptance Corp.’s loan offerings:

Loan Variety:

Credit Acceptance Corp. offers financing options for both new and used vehicles purchased from participating dealerships.


Operating as an indirect lender, Credit Acceptance Corp. extends financing through affiliated dealerships spread across all 50 states. However, the proximity of these dealerships to your location is not guaranteed. It’s important to note that some of these dealerships operate on a buy-here, pay-here model, where interest rates can be high. According to the National Independent Automobile Dealers Association’s 2019 Used Car Industry Report, the average interest rate with such dealerships was 20% in 2018.

Bankruptcy Consideration:

Credit Acceptance Corp. reviews applications from individuals with open bankruptcies reflected on their credit reports.

Good for shopping around: MyAutoLoan

MyAutoLoan stands out by offering a platform where individuals can compare auto loan offers from multiple lenders, ensuring they secure the most favorable rates possible.

This online marketplace matches borrowers with lenders within its network, streamlining the process of finding suitable auto financing options. Within just a few minutes, users can receive up to four loan offers tailored to their needs.

Here are additional details to note about MyAutoLoan:

Loan Variety:

MyAutoLoan provides a diverse array of auto loans, encompassing options for new and used cars, private party purchases, lease buyouts, and refinancing.

Bankruptcy Consideration:

Lenders affiliated with MyAutoLoan may entertain applications from individuals who have undergone bankruptcy proceedings, provided that the bankruptcy has been discharged or dismissed.

Eligibility Requirements:

Specific eligibility criteria vary among lenders, but generally, applicants must be at least 18 years old, possess a FICO® score of at least 600, and have a minimum annual income of $21,600 to qualify for a loan ($18,000 for refinance loans).

Interest Rate Calculator:

MyAutoLoan offers an interest rate calculator that enables users to estimate their rates based on factors such as loan type, amount, and credit scores. This tool aids in informed decision-making during the loan selection process.

What to consider with bad credit car loans

According to a November 2023 Experian report, individuals with lower credit scores tend to face interest rates ranging between 13.53% and 21.18% for used car loans, and between 9.29% and 14.17% for new car loans.

Given the tendency for higher interest rates among those with lower credit scores, diligently comparing offers before obtaining a new loan is crucial. If feasible, delaying the purchase while working on improving your credit may result in qualifying for lower rates in the future.

However, if purchasing a car is urgent, there are strategies to enhance approval odds and reduce financing costs. Adding a co-signer to the loan application can bolster approval chances and potentially secure better rates, although not all lenders accommodate co-signers, so verifying this feature during the shopping process is essential. Additionally, providing a down payment can improve approval chances by reducing the loan amount.

While personal loans can be an alternative for car financing, it’s important to note that they often carry higher interest rates compared to auto loans, potentially leading to higher overall costs.

Once approved for a loan, consistently making on-time payments and reducing debt can establish a positive payment history and gradually enhance credit scores. With improved credit, refinancing the auto loan at a lower interest rate may become feasible over time.


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