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Best bad credit auto loan rates for November 2022

Rhys has been editing and writing for Bankrate since late 2021. They are passionate about helping readers gain the confidence to take control of their finances by providing clear, well-researched information that breaks down otherwise complex topics into manageable bites. Mark Kantrowitz is an expert on student financial aid, the FAFSA, scholarships, 529 plans, education tax benefits and student loans. Bankrate logo The Bankrate promise To gain approval for an auto loan, lenders will assess how much of a risk it is to lend to you based on your credit history and how much the vehicle is worth compared to the loan amount. That risk level goes into determining the interest rates and terms available to you. This means getting lender approval with poor credit history can be a challenge. But it is possible. Generally, bad credit falls below 580. Many lenders - including some selected as top bad credit lenders by Bankrate - are moving past the archaic approach of purely credit-based lending judgements and factor in aspects such as payment history on previous auto loans, work history or education.

How to apply for a bad credit auto loan

The process of taking out a bad credit loan is a similar process to that of any other loan. To get started, follow these steps: 1

Calculate how much car you can afford

Budget out more than just the monthly cost - consider insurance, gas and maintenance costs as well. 2

Shop around

Compare rates and terms from at least three different lenders before moving forward. Pay close attention to APR (annual percentage rate) - which tends to be higher for bad credit auto loans. 3

Apply for prequalification

Applying for prequalification will greatly increase your likelihood of approval and will give you a better idea of what to expect for loan terms and rates. 4

Submit application

To submit your application you will need to provide information about yourself - and potentially the vehicle you're considering. Prepare this documentation ahead of time. 5

Begin loan payments

As soon as you receive your loan, your payment schedule will begin. Set automatic payments and keep track to avoid any fees.

How to choose the best bad credit auto loan

Choosing the right loan and best lender for you is based on which loan fits your budget and financial needs. When shopping for an auto loan, compare APRs across multiple lenders to make sure you are getting a competitive rate. Look for lenders that keep fees to a minimum and offer repayment terms that fit your needs. It is a good idea to gain at least three quotes before signing off on a loan. Give special attention to the following factors: 1

Approval requirements

Every lender holds its own requirements in order to gain loan approval. This is especially true when it comes to bad credit loans. Pay careful attention to minimum credit requirements to be sure you aren't applying for a loan outside your range. 2

Interest rates

The APR that lenders will offer is based on your specific financial history. It is important to remember that the lowest interest rate advertised is not what you will receive. When comparing potential rates be sure to calculate additional fees or possible penalties. 3

Loan amounts

Determining the right loan amount requires careful consideration regarding how much vehicle you can afford. Be honest about your budget and use an online calculator before applying. 4

Repayment options

Auto loan terms typically range from 24 to 84 months. The longer the lifetime of your loan is, the more interest you will pay. But a longer loan will also yield a lower monthly payment. Keep this in mind when deciding the length of your loan. 5

Customer service

Consider the benefits of a lender's customer service on aspects such as online availability, face-to-face communication and hours of operation.

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Founded in 1976 as the , a print publisher for the banking industry, Bankrate has a long track record of helping people make smart financial decisions. We've maintained this reputation over four decades by prioritizing facts and experience over hype and hearsay, and quickly responding to economic trends that offer our users a more relevant experience.

Advertiser DisclosureThe listings that appear on this page are from companies from which this website receives compensation, which may impact how, where and in what order products appear. This table does not include all companies or all available products. Bankrate does not endorse or recommend any companies.Definition of terms ApplyThe annual percentage rate (APR) includes your interest rate, plus any loan fees. It reflects the total cost of borrowing.The period of time until your loan achieves maturity and is paid off in completion. Terms can be expressed in months or years, depending on the details of your loan.The minimum credit score typically required to qualify for a loan with a given lender. Exact thresholds are not always disclosed by a lender and in certain cases the minimum score is the best estimate based on publicly available information. Credit score refers to FICO 9.0 unless otherwise stated. REFINANCE 3.9Bankrate Score 2.32 60 Apply on partner siteSee rates Offer detailsApply on partner siteREFINANCE 3.5Bankrate Score 7.49 60 Apply on partner siteSee rates Offer detailsApply on partner siteUSED 4.0Bankrate Score Pre-qualify for an auto loan in minutes with no impact to your credit scoreSee your personalized rate and monthly payment while searching millions of carsAdjust things like down payment, term length and more to build the deal that fits your finances bestKnow your financing options before visiting the dealerApply on partner siteSee rates Offer detailsApply on partner siteREFINANCE 3.7Bankrate Score7.14- 11.39 36-72 Apply on partner siteSee rates Offer detailsApply on partner siteUSED 4.2Bankrate Score 5.63 48-60 Apply on partner siteSee rates Offer detailsApply on partner siteREFINANCE3.24- 14.99 24-84 See rates Offer detailsREFINANCE 4.2Bankrate Score 3.24 48-60 Apply on partner siteSee rates Offer detailsApply on partner siteREFINANCE 3.9Bankrate Score 4.75 48-60 Apply on partner siteSee rates Offer detailsApply on partner siteREFINANCE 3.2Bankrate Score 5.19 60 Apply on partner siteSee rates Offer detailsApply on partner siteREFINANCE 14.99 60 Apply on partner siteSee rates Offer detailsApply on partner siteREFINANCE 3.6Bankrate Score 6.49 36-72 Apply on partner siteSee rates Offer detailsApply on partner siteREFINANCE 4.1Bankrate Score2.20- 29.99 24-84 Apply on partner siteSee ratesOffer detailsApply on partner site Close X

Compare the best bad credit auto loan rates in November 2022

Lender Starting APR Term Not specified 24 to 84 months Starting at 2.99% 36 to 60 months Starting at 6.85% 12 to 72 months Starting at 2.14% 12 to 84 months Loan details presented here are current as of November 7, 2022. Check the lenders' websites for more current information. The auto loan lenders listed here are selected based on factors such as APR, loan amounts, fees, transparency, credit requirements and more.

Best bad credit auto lenders of November 2022

Best for prequalification: Capital One Best for shopping multiple offers: Autopay Best for fully online experience: Carvana Best for bad credit refinance: iLending Apply on partner site Min. credit score: 700 Fixed APR From: Not disclosed Loan amount: $5,000– $200,000 Term lengths: 2 to 7 years Min. annual income: $0 Overview: offers a fully online experience for new and used purchase loans and refinancing. With no credit requirement, drivers with bad credit can get competitive rates and have the comfort of prequalification. Why Capital One is the best for prequalification: Applying for prequalification can give you the confidence of a loan offer without the hard credit pull. It provides you with your predicted rate and terms without any impact on your credit.

Pros & Cons

Pros

No hard credit check One-stop shop for your loan and vehicle Prequalification lasts for 30 days

Cons

Limited vehicle inventory APR range is not disclosed before prequalifying

Eligibility & More

Who this lender is best for: Drivers who don't mind a limited selection of vehicles and want a large shopping window. Impact on financial wellness: A soft credit check is used for prequalification. You will undergo a hard credit pull once you fully apply. Time to receive funds: Capital One borrowers can receive funding as soon as the same day they apply. Fees: Capital One charges a late fee for loan holders. Additional requirements: A loan through Capital One cannot be used at any auto dealership. Your vehicle will have to come from one of their 12,000 participating dealerships. Special features: Done fully online via the Auto Navigator. Once you prequalify current rates and expected monthly costs will be presented for available vehicles. Apply on partner site Min. credit score: None Fixed APR From: 5.63% Loan amount: $2,500– $100,000 Term lengths: 4 to 5 years Min. annual income: $0

Pros & Cons

Pros

Several lender options with one application Simple application form to speed up the process Customer support six days a week

Cons

Maximum APR not disclosed Not usable for used vehicle purchases Possible down payment requirement

Eligibility & More

A driver with poor credit shopping online for a new vehicle or refinancing. Borrowers will have to undergo a hard credit pull - which will affect your credit score. Funding is available as soon as one business day following application approval. Potential fees vary depending on your matched lender. Unfortunately, Autopay does not offer loans for used vehicles. So you will have to shop elsewhere if you're buying used. Autopay also offers cash back refinancing and lease payoff refinancing options. Read our Bankrate review Min. credit score: Not disclosed Fixed APR From: 6.85% Loan amount: Not specified Term lengths: 3 to 6 years Min. annual income: $0

Pros & Cons

Pros

Prequalification available No minimum credit requirement Money-back guarantee

Cons

Limited inventory Down payment required

Eligibility & More

A driver already shopping on the Carvana marketplace for a vehicle. A hard credit check will happen following planned vehicle delivery. Funding is available as soon as the same day as approval. Carvana charges NSF and late fees. Even with a low credit score you are eligible if you have an annual income of at least $4,000 and do not have any current bankruptcies. Vehicle and loan approval can all be done from the ease of your home and rates are current for 45 days. Apply on partner site Min. credit score: None Fixed APR From: 4.75% Loan amount: $2,500– $100,000 Term lengths: 4 to 5 years Min. annual income: $0

Pros & Cons

Pros

Assistance from personal lending specialist Quick application should only take a few minutes Wide range of terms available

Cons

No new or used purchase loans Fees are not clearly specified on its website

Eligibility & More

A driver looking to refinance their current loan with direct assistance from a loan specialist. Following the initial application a hard credit pull will be completed. Drivers can receive funds in as soon as one day. iLending does not specify potential fees. iLending holds specifications for acceptable vehicles for refinancing in terms of age and mileage. Drivers will be paired with a loan specialist to talk you through the refinance process.

What are bad credit auto loans and how do they work

Credit score New car loans Used car loans 781 to 850 2.96% 3.68% 661 to 780 4.03% 5.53% 601 to 660 6.57% 10.33% 501 to 600 9.75% 16.85% 300 to 500 12.84% 20.43%

4 tips on how to secure an auto loan with bad credit

It is possible to , although having bad credit will raise the rates you're offered. If you are having trouble getting approved or finding acceptable rates, try taking these steps: Make a large down payment: A larger will lower your monthly payment, and it could also help you qualify for better rates because it reduces the amount you have to finance. Get a co-signer: A with good credit will take on some responsibility for your loan if you default, but they can also help you qualify for the loan and potentially for a lower rate. Reduce existing debt: Before applying for an auto loan, as much debt as you can and avoid opening new accounts, like credit cards. Check your credit report. At least 30 days before you plan on applying, check your credit report. Dispute any inaccurate information to get it removed and boost your score.

Types of lenders that offer bad credit loans   

There are many options when it comes to financing your vehicle with poor credit. It is wise to prequalify to more than just one lender to ensure you get the best deal for your circumstances. Along with this, consider the drawbacks and advantages that come with each lender type. Consider the following lender options when shopping for your next car. Online lenders: Shopping online allows you to compare and apply for many different lenders all at once. It is also likely that online lenders will offer , which allows you to see your potential rates before you commit to financing. If you prefer the fully online experience, consider a retail and finance combined approach - like or . Banks and credit unions: If you have a relationship with a bank or credit union, it is wise to start there. You will likely save money working with a bank that you have already created trust with. Typically, offer assistance either at brick-and-mortar locations or online. Dealerships: The loans offered directly from the come from a bank or credit union working with the lot. While these are not always the best rates available, it does offer the convenience of a one-stop shop. If the dealer route is right for you, come prepared with competing rates to the best deal.

What to consider when refinancing your car with bad credit

If you are applying for a , keep the following constraints in mind. Vehicle mileage: The number of miles clocked on your vehicle's odometer greatly impacts the value of your car. Lenders' constraints can differ in tens of thousands of miles, so be sure to check for these types of restrictions. Age of vehicle: Many lenders will not refinance a vehicle that is over 10 years old due to the vehicle depreciation incurred over the life of the loan. Loan amount: Most lenders present minimum loan amounts for refinance loans. Depending on your financial state, factor in the entire cost you will need.

FAQs about bad credit auto loans

The process of takes quite a bit of time. But the stronger your credit is, the better rates and terms you will receive. Some ways to work towards increasing your credit score include: Keeping track of your credit score. Making payments on time. Paying down debt. Taking advantage of self-reporting. Only applying for loans you can truly afford. Not applying for too many different kinds of accounts at once.

Applying for a loan with a co-signer who has excellent credit will greatly increase your likelihood of gaining loan approval. The role of a co-signer serves as an extra layer of protection for the lender. The lender gains security because the co-signer is on the hook for payments if the primary borrower can't make them. Because of this, having a co-signer can earn you a decent rate and term, even if you don't have the best credit.

While this answer varies by specific lender, the better your score is, the better your rates and terms will be. If you have low or no credit, you may still for a loan but should expect a steeper APR. In quarter two of 2022, drivers with scores of 500 or lower received an average rate of 12.84 percent for new and 20.43 percent for used cars, according to the Experian State of the Automotive Finance Market report. Fortunately, many lenders are moving away from using credit scores as the sole measure of ability to pay off loans. Instead, lenders are considering factors such as work or education history.

There are still ways to get behind the wheel . Firstly, it is important to take time to improve your credit. Do this by paying down any debt to lower your credit utilization rate. Otherwise, consider getting a co-signer for your auto loan.

When for an auto loan, lenders will require proof of income and employment, personal details - date of birth, Social Security number, address and phone number - proof of insurance and vehicle information. It is important to fill out the application completely and correctly to ensure you avoid denial due to errors on the application.

Methodology

To select the top bad credit car loans, Bankrate considers 18 different factors. These factors include the loan amount, repayment options, acceptance criteria and dealership requirements. Each lender holds a score based on four categories. These categories include: Availability: This accounts for loan amounts, type, availability in each state, dealership requirements and range of repayment options. Affordability: Primarily, this section covers expected APR, acceptance criteria, discounts for autopay and the number of fees. Customer experience: This category includes online access, support availability, shopping window, whether there's an option for automatic payments and app availability. Transparency: Here prequalification and disclosure of rates and fees are accounted for.