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If you need a new set of wheels but your credit isn’t great, you may be able to get auto financing from a lender that specifically markets to people with credit problems.
But auto loans for bad credit often come with higher interest rates, so it’s especially important to shop around and compare loan offers. We’ve rounded up some options to consider.
- Good for people who have filed for bankruptcy: RoadLoans
- Good for a range of refinance options: Autopay
- Good for interest rate discounts: New Roads
- Good for one-stop shopping: Carvana
- Good for prequalification: Capital One Auto Finance
Why RoadLoans stands out: Bankruptcies have a significant negative impact on your credit scores, which may affect your ability to qualify for an auto loan. But RoadLoans considers applications from people who have filed for bankruptcy in the past — as long as your bankruptcy has been discharged.
Here are some more details on Roadloans auto loans.
- Loan types: RoadLoans offers loans for purchasing new or used vehicles from a dealer or refinancing an existing auto loan, including cash back refinancing in some states. RoadLoans doesn’t refinance Santander Consumer USA or Chrysler Capital auto loans.
- Availability: Auto loans from RoadLoans are available in all states except Alaska, Hawaii, Mississippi, Nevada, New Hampshire and Washington, D.C.
- Dealership limitations: Loans from RoadLoans can only be used to buy a car from one of the company’s 14,000 participating auto dealers.
- Loan amounts: RoadLoans offers loan amounts ranging from $5,000 to $75,000.
- Co-applicants: You may apply for a loan from RoadLoans with a co-applicant, which might improve your loan approval odds or help you qualify for a lower interest rate.
Read our full review of RoadLoans.
Why Autopay stands out: Autopay offers a wide range of auto loans, including loans for new and used cars purchased from a dealer or private party, as well as multiple refinancing options, including traditional, cash back and lease buyout refinancing.
Here’s some more info about Autopay auto loans.
- Multiple offers: Autopay isn’t a lender. It’s an online marketplace that connects people looking for financing with auto lenders, giving you an opportunity to receive loan offers from more than one lender.
- Ability to apply for prequalification: If you prequalify, you can check your estimated rates and loan terms without affecting your credit scores. But note that prequalification doesn’t guarantee approval or specific terms. That information will be determined after you submit a formal loan application, if you’re approved.
- Loan amounts: Loans through Autopay are available in amounts ranging from $2,500 to $100,000, and loan terms range from 24 to 84 months. Just remember that while a longer loan term can reduce your monthly payment, you’ll probably end up paying more in interest.
- Additional products: Autopay sells vehicle service contracts and guaranteed asset protection insurance for an extra fee. If your car is stolen or totaled in an accident, GAP insurance can help cover the difference between the current value of your vehicle and what you owe on your auto loan.
- Co-applicants: Autopay allows potential borrowers to apply with a co-applicant.
Read our full review of Autopay.
Why New Roads stands out: It can be tough to qualify for low rates when you have poor credit. New Roads, the direct lending division of Consumer Portfolio Services Inc., offers interest rate discounts on certain certified pre-owned and new car models that can reduce interest charges.
Here’s some more about New Roads auto loans.
- Loan types: New Roads offers new- and used-car loans, lease buyout loans and refinance loans.
- Availability: New Roads auto loans are available in only 29 states.
- No down payment required: New Roads doesn’t require a down payment. But without one you’ll need to finance a larger amount, and you’ll likely pay more interest over the life of the loan.
- Bankruptcy and repossession: New Roads considers applications from people who have a past bankruptcy or repossession on their credit reports.
- Co-applicants: New Roads allows you to apply with a co-applicant.
Read our full review of New Roads.
Why Carvana stands out: Known for its network of vending machines where car buyers can pick up their vehicles, Carvana offers the opportunity to shop for financing and a car in one place.
Learn more about Carvana.
- Only one loan type: Carvana only offers loans to finance its in-stock inventory of used cars. If you want a different type of auto loan or don’t want to be restricted to Carvana’s inventory, you’ll need to work with a different lender.
- Ability to apply for prequalification: Carvana offers a prequalification process that allows you to see estimated rates and terms you might qualify for without affecting your credit scores. Some auto lenders offer prequalification that’s good for only 30 days, but Carvana’s prequalification offers are good for 45 days.
- Eligibility requirements: Carvana requires applicants to have a minimum income of $10,000 and no active bankruptcies.
- Co-signers: Carvana doesn’t allow co-signers. If you want to apply with one, you’ll need to work with a different lender.
Read our full review of Carvana.
Why Capital One Auto Finance stands out: Some lenders don’t offer the ability to prequalify for an auto loan without generating a hard credit inquiry, which can affect your credit scores. But when you apply for prequalification with Capital One Auto Finance, you can check your estimated loan rate and term (assuming you get a prequalification offer) without affecting your scores. You’ll have to submit a full application to see if you’re approved and get your final loan terms.
Here’s some more info about Capital One Auto Finance.
- Loan types: Capital One Auto Finance offers loans for new or used cars from a dealer or for refinancing your existing auto loan from a different lender.
- Loan amounts: The minimum loan amount Capital One Auto Finance offers is $4,000. Your maximum loan amount is determined by your credit history, income and other factors.
- Dealership limitations: Capital One Auto Finance loans must be used at one of the company’s 12,000 participating car dealerships.
- Vehicle restrictions: Capital One Auto Finance doesn’t finance commercial vehicles, motorcycles, RVs, ATVs, boats, campers, motor homes or certain vehicle brands.
- Online car shopping: You can search for cars that fit your needs while also shopping for financing with Capital One Auto Finance’s Auto Navigator tool.
Read our full review of Capital One Auto Finance.
How we picked these lenders
We selected lenders for this roundup based on factors that could be helpful for people with bad credit. Here are some of the factors we considered.
- Range of auto loans offered
- Ability to apply for prequalification so you can see estimated rates and terms
- Whether co-applicants are allowed, which could help applicants get better loan terms or rates
- Other perks, like rate discounts
What to consider with bad credit auto loans
Since people with lower credit scores typically pay higher interest rates, shopping around before you get a new loan is especially important. If it’s possible to postpone your purchase while you build your credit, you may be able to qualify for a lower rate in the future.
But if you really need to buy a car now, consider applying with a co-signer. Adding a co-signer who has a solid credit history may improve your chances of being approved and getting a lower rate.
If you’re approved for a loan, making your payments on time and reducing your debt can help you establish a positive payment history and improve your credit over time. As you build your credit, you may eventually be able to refinance your loan at a lower interest rate.