Bad Credit Car Loans: Best Subprime Auto Lenders (2022) – Automoblog
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In 2022, the best subprime auto lenders for bad credit car loans are myAutoloan, Capital One, and Auto Credit Express.
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Compare which options fit your budget, credit score, and term length below.
*All APR figures last updated on 4/6/2022 – please check partner site for latest details. Rate may vary based on credit score, credit history and loan term.
In this article, we’ll cover a few reliable lenders for bad credit car loans, highlight the best subprime auto lenders, and talk about how to get approved for a bad credit car loan. We will also show auto loan rates for bad credit and give tips on how to increase your credit score. We’ve reviewed the companies with the best auto loan rates, and we recommend comparing offers from multiple top lenders.
Here are some things to keep in mind when you are searching for bad credit car loans:
Below are seven of the most reputable companies that offer bad credit car loans. You’ll see that some of them have minimum FICO credit score requirements, while others do not. Whether or not there’s a credit score requirement, most companies require you to have a certain amount of income each year. You should be prepared to provide supporting documentation in the application process.
Below are the lenders that offer the best car loans for bad credit currently:
Below are the three best subprime auto lenders for bad credit car loans. Along with the auto loan details listed, we will give information related to their history with bad credit borrowers, highlights related to their services, and customer reviews.
MyAutoloan.com is an online lending marketplace that specializes in bad credit auto loans. The company has been around since 2003, which is a long time for an internet-based company. You need a FICO score of 575 and an annual income of $21,000 to qualify for a new car loan. Here are a few additional things that make myAutoloan.com a good option.
While some banks have high credit score requirements for auto loan financing, Capital One does not. In fact, Capital One Auto Finance doesn’t require a minimum score at all. Instead, you need to be 18 years of age and make at least $18,000 annually (or $21,600, depending on your credit score). Here are a few highlights of bad credit car loans through Capital One:
Auto Credit Express is another online lending marketplace that specializes in car loans for bad credit. The company has helped millions of customers since its founding in 1999. There are no credit score requirements for securing a loan through Auto Credit Express, and loan amounts can range from $5,000 to $45,000. Here are a few more highlights:
How you can get a car loan with bad credit depends on your credit score, the amount you can pay for a downpayment, and the lender you choose. Many lenders are willing to work with you to find the best auto loan rates and terms for your situation. However, we recommend that you try to increase your credit score before you shop around and compare offers so you can get the best bad credit car loans.
We know getting approved for a car loan with bad credit is difficult so we have listed the best ways to improve your chances of getting the ideal loan terms for your situation. These methods include:
The average interest rates for a car loan with bad credit range from 10.87% to 14.76% for new cars and 17.29% to 20.99% for used vehicles. Average rates for bad credit car loans are quite high and are primarily influenced by your credit score. In the section below we will go into more detail about why this is.
Usually, those with bad credit have the highest car loan rates since they are typically seen as the riskiest borrowers. So, lenders tend to charge the highest rates for bad credit car loans to combat this risk. To put this in perspective, below are the average rates for new and used car loans by credit score according to Experian’s Q1 2022 State of the Auto Finance Market report.
In the chart you can see there are five categories based on credit score: superprime, prime, nonprime, subprime, and deep subprime. Those with bad credit fall into the subprime and deep subprime credit categories. Moving from one tier to the next increases car loan interest rates and rates jump the most from nonprime to subprime.
When you borrow money to buy a car, the lender basically purchases the car for you. Then, it charges you interest for using its money while you pay back the purchase price. To the lender, a low credit score means the borrower is less likely to make on-time payments and poses a higher risk for nonpayment. Auto lenders charge more in interest to offset this risk.
You can save a lot of money by moving your credit score in the right direction. Let’s look at a quick example of how credit scores affect auto loan rates. If you financed a new car with a $15,000 loan for 60 months, you’d pay:
You can see that a few hundred points on the credit score scale can account for thousands more in interest. If you were to move your score up 100 points, say from 450 to 550, you could expect to save about a thousand dollars in interest on this loan amount. Even moving 25 or 50 points can have a positive impact on the rates you find.
Keep in mind that your credit score isn’t the only thing that changes your loan payment. If you choose to get an extended car warranty at a dealership, that cost could be rolled into the price of your loan as well.
If you can take some time to postpone financing a new vehicle, work on some of the following things to raise your score:
If you have bad credit, you still have options for a car loan. 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. However, you don’t have to settle for the first offer you come across, and it’s always a good idea to compare multiple options.
Today, many companies offer online loan pre-qualification offers with just a few clicks. A few years ago, you had to physically go around to banks, credit unions, and dealerships, but now that isn’t the case. To find the right financing for bad credit car loans, we recommend comparing multiple auto lenders and reading about the terms of each loan. Below are some highly rated bad credit car loans lenders so you can compare rates.
Below are the answers to some frequently asked questions about bad credit car loans:
Yes, but be aware that these bad credit car loans are often at higher rates than subprime dealers. They are not completely guaranteed and instead often require a minimum income and a down payment.
A number of companies offer financing for people with bad credit, including myAutoloan.com, Capital One, and Auto Credit Express. You may also find loan offers from your local bank or credit union, especially if someone with better credit can cosign for you.
Yes, you can get a car loan with a credit score of 500, but you’ll pay more overall. According to Experian’s 2020 State of the Auto Finance Market report, drivers with a score of 300 to 500 pay average rates of 13.97% for new cars and 20.67% for used cars.
Yes, you can get a car loan with very poor credit. You’ll pay more for interest in the long term, so it can be a good idea to choose a cheaper car or get a cosigner. In any case, multiple providers cater specifically to people with poor credit scores.
You can get car loans for bad credit from many different subprime auto lenders online, through banks, credit unions, or dealerships. We recommend getting prequalified and comparing provider offers before making a commitment.