Getting a car loan with bad credit isn’t easy—but it’s definitely possible. Many lenders understand that credit scores don’t tell the full story and offer financing options specifically for people with low credit scores. In this guide, we’ll cover the top 7 auto loan options for bad credit to help you find the best fit for your situation.
1. Credit Unions
Why it’s a good option:
Credit unions are member-owned and often more flexible than traditional banks. They may offer lower interest rates and be more willing to work with members who have credit challenges.
Best for: People with steady income and the ability to join a local or employer-based credit union.
Tip: Check with local credit unions first, as they may have special loan programs for bad credit.
2. Online Lenders Specializing in Bad Credit Auto Loans
Why it’s a good option:
Online marketplaces like Auto Credit Express, myAutoloan, and Car.Loan.com specialize in connecting bad credit borrowers with lenders. These platforms often allow you to compare multiple offers at once.
Best for: Borrowers who want to explore several offers quickly without going to a dealership.
Top picks:
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Auto Credit Express
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myAutoloan
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LendingTree Auto Loans
3. Subprime Auto Lenders
Why it’s a good option:
Subprime lenders cater to customers with low credit scores, often below 600. While interest rates will be higher, these lenders can approve people who might be denied elsewhere.
Best for: Borrowers with poor credit histories or recent bankruptcies.
Examples of subprime lenders:
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RoadLoans
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Capital One Auto Finance (pre-qualification available)
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Westlake Financial Services
4. Buy Here, Pay Here Dealerships
Why it’s a good option:
These dealerships provide in-house financing, so your loan and vehicle come from the same place. They usually don’t rely on credit checks.
Best for: People with very poor credit or no credit who are having trouble getting approved elsewhere.
Warning: Interest rates can be high, and vehicles may be older or come with limited warranties. Always read the fine print.
5. Banks Offering Second-Chance Auto Loans
Why it’s a good option:
Some banks offer “second-chance” or “fresh start” car loans for people rebuilding their credit. These loans may require proof of stable income and a down payment.
Best for: Borrowers with low credit but strong banking history or existing relationships.
Tip: Contact your current bank to ask if they offer special programs for bad credit auto loans.
6. Co-Signed Auto Loans
Why it’s a good option:
If you can’t qualify alone, a co-signer with good credit can help you get a lower interest rate and better loan terms. This significantly increases your approval odds.
Best for: Borrowers with close family or friends who are willing to share responsibility.
Important: The co-signer is legally responsible if you default on the loan.
7. Dealership Financing for Bad Credit
Why it’s a good option:
Many traditional dealerships partner with a network of lenders that work with bad credit borrowers. Some offer “second chance financing” programs designed to help buyers rebuild credit.
Best for: People who want to shop and finance at the same location, with flexible down payment options.
Tip: Call ahead and ask if the dealership works with bad credit customers or offers special programs.
How to Choose the Right Auto Loan for You
When comparing your auto loan options, be sure to evaluate:
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Interest rate (APR)
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Loan term (length)
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Total cost of the loan
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Reputation of the lender
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Any fees or penalties
Use a loan calculator to compare the total repayment costs over time—not just the monthly payment.
Final Thoughts
Having bad credit doesn’t mean you’re out of options when it comes to financing a vehicle. From credit unions and online lenders to dealership financing and co-signed loans, there are many paths to car ownership. Do your research, compare offers, and choose the option that’s right for your financial situation.
