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While having bad credit means you’ll likely pay more for a financed car, drivers can still get reasonable auto loans from myAutoloan, Gravity Lending and Ally.
Key Takeaways
In this article, we at the MarketWatch Guides team will explain how to get a car loan, how to get the best chances of approval, where you can apply and what interest rates you can expect. Based on our research, we’ll also recommend several auto lenders that offer services to people with poor credit — including some that offer the best car loan rates of 2023.
Learn more about our methodology and editorial guidelines.
From our extensive research, we found the best car loans for bad credit are offered by myAutoloan, Ally, AutoPay, Prestige Financial, Capital One, Carvana, Carmax, Credit Acceptance Corp, and New Roads. Each company offers low minimums for both income and credit score as well as affordable rates for purchase loans and auto refinancing with bad credit.
The table below breaks down the companies with the best auto loans for bad credit. To make for an easy comparison, we’ve highlighted each lender’s minimum-required credit scores and annual incomes for prospective recipients. You’ll also find whether these lenders offer car loan pre-approval:
| Subprime Auto Lender | Starting APR | Minimum Credit Score | Minimum Annual Income | Pre-Approval Offered? |
|---|---|---|---|---|
| Ally | 4.74% | 580 | $24,000 | No |
| AutoPay | 5.69% | 575 | Not specified | Yes |
| Gravity Lending | 4.99% | 640 | Not specified | Yes |
| myAutoloan | 6.99% | 575 | $21,600 | Yes |
| Prestige Financial | Varies | None | Not specified | Yes |
| Capital One | Varies | None | $18,000 | No |
| Carvana | Varies | None | $10,000 | No |
| Carmax | Varies | None | Not specified | No |
| Credit Acceptance Corp. | Varies | None | Not specified | Yes |
| New Roads | Varies | None | Not specified | Yes |
From our list of nine providers, we narrowed down the top three subprime auto lenders. While we recommend these lenders, it is best to compare multiple auto loan providers to find the best deal.
To help you begin comparing, we’ll break down our picks for best bad-credit car loan providers in the sections below. We’ll also cover their loan details and customer reviews.
Starting APR: 6.99% for new cars, 7.24% for used cars
Loan amounts: $8,000 minimum for most loans ($5,000 for refinance)
Loan terms: 24 to 72 months
Availability: 48 states (not available in Alaska or Hawaii)
Minimum credit score: 575
Pre-approval/Prequalification: Only pre-approval offered
The myAutoloan marketplace allows you to compare when you shop for new and used auto loans, refinance auto loans and lease buyout loans. Since myAutoloan functions as a marketplace for lenders and has a minimum credit score requirement of 575, it offers more opportunities for loan approval.
MyAutoloan has overall positive reviews from customers and sports an overall rating of 4.1 out of 5.0 stars on Trustpilot from over 850 people. The company is also accredited with the Better Business Bureau (BBB) and has an A+ score from the organization. The main things customers talked about were myAutoloan’s fast and transparent online process and its helpful service agents.
Read more: myAutoloan review
Starting APR: 4.99%
Loan amounts: Varies
Loan terms: 36 to 84 months
Availability: 50 states
Minimum credit score: 640
Pre-approval/Prequalification: Only prequalification offered
Gravity Lending offers auto refinance loans, lease buyouts and cash out loans for borrowers. Rates start at 4.99% APR for refinancing, although interest rates will vary depending on the lender you are paired with. Customers can find loan terms from 36 to 84 months, which has earned Gravity Lending our award for “Flexible Loan Terms”.
Among customers, Gravity Lending has stellar customer service reviews. On Trustpilot they scored a perfect 5.0-star rating from almost 1,800 reviews. On the BBB website they received a rating of 4.9 out of 5.0 from over 1,500 customers.
On both sites, the company was praised by customers for having agents that went the extra mile and for having an overall streamlined process.
Starting APR: 4.74%
Loan amounts: $1,000 to $300,000
Loan terms: 36 to 75 months
Availability: 48 states (not available in Nevada, Vermont or Washington, D.C.)
Minimum credit score: 580
Pre-approval/Prequalification: Only prequalification offered
Ally is one of the largest car finance companies in the U.S. The lender offers loans on new or used vehicles, auto loan refinancing and lease buyout services. According to our research, APRs for refinancing start as low as 4.74% and loan terms of up to 75 months are available. Ally has a minimum credit score requirement of 580, making it easier for those with subprime credit to get approved.
When it comes to Ally, customer reception tends to be on the negative side. They scored a 1.5 out of 5.0 from Trustpilot reviewers and a 1.1 out of 5.0 on the BBB site. However, it should be noted that these are based on very few reviews which don’t represent Ally’s large customer base.
Even if you have bad credit, you have several auto financing options to choose from — you just need to find the right lender for your situation. There are four main types of lenders you can reach out to:
| Online lenders | Online lenders are convenient because you can find out whether you have been approved for a new loan within minutes. They may also provide you with a lower interest rate since they have lower overhead costs.
These lenders are also more likely to offer pre-approval so you can get an idea of your loan payment and interest rate before you make a purchase. |
| Banks | Many national and local banks offer car loans. However, some banks may only allow you to get a loan through dealer-arranged financing. |
| Credit unions | Most credit unions offer car loans with low interest rates. You may be able to apply for a car loan directly or through a dealership. The only downside is that you may have to be a member of the credit union to qualify for its offerings. |
| Car dealerships | Dealerships tend to offer their own financing options, or they will shop around for you through dealer-arranged financing. |
According to our research, here is where customers are getting their auto loans from in 2023:
Getting an auto loan with bad credit can be a difficult venture that often comes with many application denials. Even if you’re approved, you’ll typically get high interest rates. The sections below will walk you through the process of getting a car loan with bad credit and the resources you’ll need when applying for any loan.
When searching for a bad-credit car loan, here are some best practices to follow before applying:
The first step to getting any auto loan is to check your credit score — especially if you think you have bad credit. Knowing can help you set expectations of what rates you may receive and gauge whether a lender is giving you a good deal.
It’s also good to get a free credit report so you can check for any inaccuracies that may be lowering your score. You can request a free report from Experian and Equifax to review your information before moving forward. In the graphic below, you’ll see a breakdown of the factors that affect your credit score, and how much they affect your score.
By keeping track of what’s left after payments for rent or mortgages, food, utilities, services and any other loans you have, you’ll have a much stronger idea of how much you can afford for a car loan. You’ll also know which terms you’d need in an auto loan contract and which cars you could afford.
You can use an auto loan calculator to estimate monthly car payments and experiment with different rates, term lengths and down payments to find what works best for you.
To apply for a car loan, you’ll need to have certain information handy, including your:
Some financial institutions may also ask for additional information before a loan is approved, like your pay stubs, driver’s license or personal references.
Applying for pre-approval can give you the best chance to get approved for an auto loan with bad credit. A pre-approval will give you a conditional loan offer with estimated rates and terms that you’ll most likely receive. Having an offer in hand is something you can use to negotiate with other lenders for better deals. It can also help you feel more confident about what to expect when shopping around.
Keep in mind that auto loan pre-approval results in a hard credit check which can lower your credit score temporarily. We also recommend not applying for multiple pre-approvals at the same time — so you can avoid being treated as an inquiry.
Compare providers when searching for the best bad credit auto loan for your situation. Try looking for lenders that specialize in bad credit financing along with those with low credit score and income requirements. Also, shop around with multiple types of lenders to give yourself the best chance of getting favorable rates and terms.
* The calculators used on this website are being provided for educational purposes only. Data will not be collected or stored. The results are estimates based on information you provide and may not reflect actual pricing of your quote.
When you apply for a standard used or new car loan or refinance loan, you may not be approved the first time if you have a bad credit history. Here are some tips that can help you increase your chances of getting approved by an auto loan lender:
You can ask someone with a strong credit report who you trust to co-sign a bad credit auto loan. By co-signing, the person agrees to pay back the loan if you default. This allows you to take advantage of lower interest rates that you would otherwise not get.
If you can afford to buy a vehicle with cash, it might be your best option — even if it’s not the car of your dreams. Owning a car outright means you don’t risk repossession. Since you don’t owe any money on the vehicle, it can be considered a financial asset rather than a liability. This can help bring your credit score up for future car shopping.
If you make a large down payment when purchasing your used or new car, it will decrease the loan amount. This makes it more likely that a lender will approve your loan since it’s reducing the overall risk.
If you’re looking to buy a used car, you’ll typically pay less by buying from a private seller rather than a dealership. These purchases can be financed with a personal loan or a private party auto loan.
Raising your credit score takes time, so it won’t help you get car financing in the short term. But increasing a poor credit score by paying off credit cards and always making monthly payments on time will eventually improve your FICO® score. As your score increases, it will open the way to getting better rates and increase your chances of getting approved.
For those with bad credit, average auto loan rates range from 11.53% to 21.32% on average for new and used vehicles. Subprime or bad credit is typically reflected in a FICO score of 579. If your credit score falls below this threshold, a lender may assume an inability to pay bills on time and can result in higher interest rates or a lack of loan eligibility.
A good APR for a car loan with bad credit depends mostly on the average interest rate for your credit score band. For example, if you fall into the fair category on the FICO credit score model and are looking for a new car, a rate below 11.53% would be a good deal. It’s best to gauge whether you’re getting a favorable APR off your own unique financial situation.
The tables below show average auto loan interest rates by credit score for new and used cars, according to Experian’s State of the Automotive Finance Market Q1 2023 report:
If you have bad credit, you still have options for auto loans. You can get bad-credit car loans from a number of banks, credit unions, dealerships and online lenders. Typically, you’ll pay a higher interest rate, but you don’t have to settle for the first offer you come across. Even with our top picks in mind, we recommend that you shop around and compare providers to find the best auto loan for you.
Below are some frequently asked questions related to bad credit auto loans:
After researching the car finance industry, we think that myAutoloan is best for those with bad credit. The company offers auto refinancing, lease buyouts and loans for new and used cars. Additionally, the marketplace only requires a credit score of 575 — making it easier for subprime borrowers to get a loan.
Getting a car loan with a 500 credit score is possible, but it depends on the provider. Some auto lenders will work with you if you have a bad credit score, while others will not consider your loan application. Consider lenders that specialize in bad-credit car loans.
Most auto loan lenders will approve a borrower who has a credit score of 690 or higher, but there is no set minimum. This score range is typically considered “good credit.” To get a better idea of your approval chances, find out a lender’s minimum credit score requirement for a car loan before applying.
On the FICO Score model, a subprime credit score is a range from 600 to 660 and below that is considered deep subprime. Car loan seekers with these credit scores are considered to have bad credit and will have much higher interest rates for their loans.
Typically, used vehicles are easier to purchase with a bad or subprime credit score. However, how easy it will be to get a car loan depends on the lender. That’s why it’s best to compare different vehicles and all available options before making a decision.
Lenders will ask for your Social Security number, work history, credit score and gross annual income information when you apply for a loan. They may also ask for additional supporting documents, like personal references or pay stubs.
Because consumers rely on us to provide objective and accurate information, we created a comprehensive rating system to formulate our rankings of the best auto loan companies. We collected data on dozens of loan providers to grade the companies on a wide range of ranking factors. The end result was an overall rating for each provider, with the companies that scored the most points topping the list.
Here are the factors our ratings take into account:
Our credentials:
*Data accurate at time of publication.
If you have feedback or questions about this article, please email the MarketWatch Guides team at editors@marketwatchguides.
