Bad credit can be a barrier to getting approved for a car loan or for receiving favorable terms. Fortunately, even if your credit history has some blemishes, you still have options from banks, credit unions, fintechs and other institutions.
CNBC Select compared more than 20 lenders to pick the ones that are best for auto financing with weak credit, based on credit requirements, affordability, types of loans offered, customer service and other factors. (Read our methodology to find out how we made our picks.)
Best car loans for bad credit
Find the right auto loan
Best for convenience: Carvana
Carvana Auto Loan
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APR
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Loan types
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Loan amounts
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Terms
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Minimum credit score
Carvana does not have a minimum credit score requirement, but some partner lenders might
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Fees
No origination fee or early payoff penalty. $5 late fee after a grace period of 16 days
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Availability
Carvana is licensed to lend in all 50 U.S. states.
Pros
- Open to borrowers with bad credit
- No prepayoff penalty
- Prequalification available
- Allows co-signers
Cons
- Financing only available for cars sold through Carvana
- Not available in all states
Who’s this for? In addition to having no minimum credit score requirement, Carvana streamlines car shopping, financing and delivery into one seamless process. Get your vehicle from one of its car vending machines or have it delivered directly to your driveway.
Standout benefits: Carvana has a seven-day return policy. Applicants can get prequalified in two minutes with no harm to their credit score.
Best for borrowers with a co-signer: Capital One Auto Finance
Capital One Auto Finance
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APR
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Loan types
New vehicles, used vehicles, refinancing
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Loan amounts
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Terms
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Minimum credit score
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Fees
There is no early payoff penalty. Late fees depend on the lender.
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Availability
Capital One Auto Finance offers car loans nationwide except in Hawaii and Alaska.
Pros
- Lends to borrowers with bad credit
- No early payoff fees
- Prequalification available
Cons
- Only available for vehicles from participating dealers
- You must apply at the dealer to get the final loan terms
Who’s this for? One way to get approved for financing with bad credit is applying with a creditworthy co-signer. Unlike some lenders, Capital One Auto Finance allows you to add a co-signer or co-applicant to get approved and get more favorable terms.
Standout benefits: Capital One’s Auto Navigator tool allows you to prequalify for multiple offers at once with no impact on your credit score.
Best for used cars: Carmax Auto Finance
CarMax Auto Loan
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APR
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Loan type
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Loan amounts
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Terms
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Minimum credit score
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Fees
No origination fee or prepayment penalty but late fees vary by state and contract.
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Availability
CarMax does not lend in Alaska, Arkansas, Hawaii, Montana, North Dakota, South Dakota, Vermont, West Virginia or Wyoming
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? If you’re shopping for a used car, CarMax Auto Finance has a huge inventory of pre-owned vehicles. It offers both in-house financing and loans from partners like Ally Auto, Capital One and Santander, that offer competitive rates and no minimum credit score requirement.
Standout benefits: CarMax’s 3-Day Payoff Program allows customers to replace their CarMax financing with a better APR from another lender for free within three business days of the purchase.
Best for refinancing: Autopay
Autopay Car Loan
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APR
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Loan type
Used and new vehicles, refinancing loans, lease buyout
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Loan amounts
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Terms
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Minimum credit score
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Fees
No early payoff penalty. Late fees vary by lender.
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Availability
Autopay is available in all 50 U.S. states.
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? Looking to refinance? Online loan aggregator Autopay stands out for its abundance of refinancing options, including traditional and cash-back financing, as well as lease-buyout financing.
Standout benefits: Funding can be available as soon as the same day. Borrowers can get preapproval for offers from banks, credit unions and online lenders without damaging their credit. Autopay also offers gap insurance and service contracts.
Best for low or no down payment: Westlake Financial
Westlake Financial Auto Loan
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APR
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Loan type
New and used cars, RVs, commercial vehicles, classic cars, luxury and exotic cars
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Loan amounts
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Loan terms
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Minimum credit score
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Fees
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Availability
Westlake Financial lends in all 50 U.S. states
Pros
- Lends to borrowers with bad credit
- Online pre-qualification available
- Provides financing for RVs and luxury, classic and exotic cars
Cons
- Received C from Better Business Bureau
Who’s this for? Westlake Financial has an array of financing options for borrowers of every credit score (or no credit), including options with rates as low as 4.99%, terms up to 72 months and down payments as low as $0.
Standout benefits: Westlake works with a network of over 50,000 car dealerships. Its eContracting service streamlines paperwork and allows for funding up to a full day sooner.
Best for long repayment terms: iLending
iLending
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APR
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Loan type
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Loan amounts
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Terms
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Minimum credit score
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Fees
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Availability
iLending lends in all 50 U.S. states except Hawaii.
Pros
- Low minimum credit score
- Longer repayment terms available
- Allows borrowers to skip payments
- No application fee
Cons
- Only offer refinancing, not financing for new or used cars
- Fee structure not clear on website
Who’s this for? If you’re looking to refinance, iLending has term lengths as long as 96 months. Most lenders cap out at 72 months.
Standout benefits: To get matched with one of its lenders, iLending only requires an income of $1,500 per month, a 560 credit score and a credit history of just six months with at least one account on it.
What is a bad credit car loan?
A bad credit car loan, also known as a subprime or second-chance loan, is auto financing for a borrower with a low credit score or thin credit history.
While the exact score varies by lenders, most find scores above 670 as indicating good creditworthiness. Someone with a FICO score of 580 or less is generally considered a high-risk applicant.
You may still get approved for financing, but you’ll likely be offered a higher interest rate and less favorable terms.
That said, lenders look at other factors, too, 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.
How to improve your chances of being approved for an auto loan
There are several ways you can improve the odds of approval:
- 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.
Auto loan calculator
Before taking on an auto loan, it’s important to estimate your monthly payments. CNBC Make It offers a handy loan calculator that can help you see how much you will pay monthly, how long it will take to pay off the debt and how much you’ll pay in interest.
Auto loan FAQs
What is a bad credit score for an auto loan?
A bad credit score is typically considered 580 or lower. It makes it harder to find financing, but there are lenders who work with customers of all credit profiles.
Can I get a car loan with a 500 credit score?
It’s possible to get a car loan with a credit score of 500, even though that’s considered a poor score. Your best bet would be to work with a lender that’s known for giving loans to people with a subpar credit history.
Because having a 500 credit score represents a significant risk to the lender, it will likely charge you a higher interest rate for the loan than if you had a better score. If possible, improve your credit before applying for a loan to get more favorable terms.
Is it better to get an auto loan from a bank or the dealership?
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.
Which FICO® score is used for auto loans?
Generally, the main scoring models used for auto loan approval are the Vantage 3.0 and 4.0 scores, the FICO® Auto Score and the FICO® 8 and 9 scores.
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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:
Credit requirements: Each lender approves financing for applicants with a FICO score of 580 or below and offers the option to add a co-signer or co-borrower.
Loan sizes: Lenders on our list provide loans in a range of sizes, from $500 to $100,000, and advertises its respective payment limits and loan sizes.
Loan 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.
Application process: We considered whether lenders offered same-day approval and a fast online application process. Each lender on our list offers prequalification without triggering a hard inquiry and damaging your credit score.
Fees: Lenders that do not charge an origination fee or prepayment penalties were given more weight.
User experience: We considered whether a lender provides rates, terms and other information on its website and if it has a mobile app and an online chat feature. We also considered the availability of customer service representatives.
We also considered CNBC Select audience data when available, such as general demographics and engagement with our content and tools.
Based on those criteria, our choices for the best car loans for bad credit are:
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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.
