6 best bad credit car loans of September 2024 (2024)

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.)

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.

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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.

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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.

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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.

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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.

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Who's this for? Westlake Financial offers several auto loan finance programs with different credit score requirements. The Standard program requires credit scores in the 0–599 range; the Gold program caters to credit scores in the 600–699 range; the Platinum program is for credit scores in the 700–749 range and the Titanium program is for credit scores 750 and up.

Standout benefits: You can use Westlake Financials website to browse vehicle inventory at dealerships within its partner network, making it a convenient place to find both a your next car and the loan to pay for it.

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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, with you only needing to fill out a short 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

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Known for its vehicle vending machines, Carvana provides loans for cars from its inventory, works with customers of all credit types and accepts 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

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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

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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

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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

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Westlake Financial is a financial services company with a network of over 50,000 new and used car dealerships. Potential borrowers can use its website to search for vehicles and then get pre-qualified for a loan. Westlake Financial also lets you check your credit score for free through its credit monitoring tools.

Auto loan purpose

New and used cars, RVs, exotic cars, commercial vehicles and classic cars

Co-borrowers allowed?

Not disclosed

Credit score requirements

Considers all credit scores

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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.

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.

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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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