Best Car Loans for Bad Credit

Having a poor credit score will not stop you from getting a car loan. However, you’ll likely have to pay more interest, make a larger down payment, or go with less expensive cars. This guide goes in-depth on how to avoid those with the best car loans for bad credit.

Understanding Poor Credit and Its Impact on Car Loans

Reports from the third quarter of 2025 indicated that only about 0.48% of new car loans went to those with bad credit scores (300-500). Those with credit scores above 781 had the most success with new car loans.

Some of the challenges you’ll face when trying to secure a car loan approval with poor credit are as follows:

• Higher interest rates: With bad credit, you can expect double digits in your interest rates. The rates are also typically higher when you turn to used cars.
• Higher down payments: Lenders will expect you to have skin in the game by making larger down payments.
• Limited vehicle selection: Even if you secure car loans with poor credit, you’ll still miss out on higher-trim vehicles.
• Stricter terms and more documentation: Before you get the advance with bad credit, you’ll have to provide personal references, proof of residency, proof of income, and other personal details.

Top Lenders and Their Offerings

When it comes to getting car loans with bad credit, here are our top recommended lenders:

Capital One: Flexible Dealership Loans

With Capital One, you can get an online prequalification. The best part about that is that the pre-qualification has no impact on your credit score, whether it is for new or used cars.

Another highlight feature of Capital One is its vast dealership network for used and new car auto loans. You can view real-time estimates of the APRs and monthly payments, and also track the value of your vehicle to manage your loans via the Capital One website. 

Pros

• Free online pre-qualification with no impact on credit scores
• Large dealership network
• The platform supports payment postponement

Cons

• You can only buy from dealerships in Capital One’s network
• The rates are not competitive when compared to other lenders that accept poor credit

OpenRoad Lending: Refinancing Suitability

If you want to lower your car payment with bad credit, OpenRoad is worth checking out. The platform accepts bad credit scores as low as 480, but it gets better. You can also add a co-borrower (with good credit) to get the loan and receive better rates.

Pros

• You can get monthly savings from your refinancing
• OpenRoad Lending has a fast application and approval process
• You can add co-borrowers to increase your chances

Cons

• Car loans typically come with high APRs if you have poor credit

CarMax: Convenient Used Car Loans

CarMax works best for used cars and provides several features that help you find the best deals. One of these features is the regular price drops on its cars.

This platform doesn’t just provide car loans on used vehicles, but also provides a detailed history report on every vehicle.

Pros

• You can browse cars by brands and types
• The platform works with multiple finance sources to accommodate bad credit and higher credit scores

Cons

• You’ll get higher sticker prices

CreditCube

CreditCube offers a fast approval process and no repayment fees. You also get a premium loyalty program that includes up to a 66% discount on the fees.

We recommend CreditCube if you want to avoid payday car loans or overdraft fees. With it, you can get the flex-pay installment loan that allows you to pay back within months.

The above features are notable, but the most important part about using CreditCube is that you don’t need a credit score for it. That means you can easily get car loans even if you have bad credit.

Pros

• The entire process is online on its web page
• You don’t need a credit history to get a loan
• CreditCube reports on-time payments to credit unions, offering you the opportunity to improve your credit score

Cons

• First-time users are limited to $500
• You may get relatively high interest rates

Spotloan

If you need money to sort out car emergencies, loans like Spotloan are the way to go. The application process is fast. While it doesn’t disregard your credit score like CreditCube, it will still lend to you even with bad credit.

Pros

• You have the option to pay installments
• The application process takes 10 minutes

Cons

• You can only get up to $1,500
• The platform  does not offer direct car financing

Uprova

This platform offers quick car loans and the opportunity to move past your bad credit. So far, it has given out 700,000 loans and paid over $800 million to borrowers. You can borrow up to $5,000 with this option, which makes it commendable when compared to other loan options.

Pros

• It is accessible even with poor credit
• The platform offers fast funding for car loans (within 24 hours)

Cons

• The interest rates are relatively high
• It doesn’t have a dedicated car loan

How to Qualify for a Car Loan with Poor Credit

While the conditions will be more stringent, you can still qualify for a car loan with bad credit. One way is to opt for lenders that do not consider poor credit a priority when giving out car loans.

Importance of Credit Scores

Lenders regard credit scores as a shorthand for risk. They use the scores not just as a deciding factor in giving you the advance but also as a determinant of how much they will charge you for it. That is why those with good credit scores (780+) typically get the best annual percentage rates (APR).

If you have poor credit, you could end up paying more for the car. You will also have a limited selection of vehicles you can pick loans for.

Meeting Lender Criteria

A few criteria you will have to meet include:

• Your income and employment (this is the primary proof of your ability to meet the payment plan)
• Proof of residency (lenders will need to know that you won’t disappear with the collateral)
• References with their addresses and phone numbers
• Proof of insurance

Strategies to Improve Loan Approval Chances

The following are a few strategies you can use to get car loans even with bad credit:

Increasing Down Payments

This approach lowers the loan-to-value (LTV) ratio. It ensures the car is always worth more than the balance and can also signal financial discipline. The odds of approval will increase when you do this.

Utilizing Co-Signers

The co-signer can help you bypass your poor credit. That is because the lender will view the co-signer as a financial safety net.

Co-signers can also help you meet the minimum monthly income requirements. Even better, you can build better credit scores with the repayment.

Trade-in Value Considerations

Your trade-in can act as your down payment or part of it. The lender can also take it as a buffer, which lowers your risk.

Tools to Aid in Decision Making

Some of our recommended tools when taking out car loans with poor credit are as follows:

Using Auto Loan Calculators

With an auto loan calculator, you can quickly determine your total loan amount, the upfront payment, the loan interest, and the total cost. Parameters you can input include the auto price, the loan term, the interest rate, the trade-in value, the down payment, and your state.

Exploring LendingTree’s Payment Estimation

LendingTree is a vital tool you can use to compare terms and amounts from different lenders. The table below shows a comparison between CarMax and Capital One using LendingTree:

Bankrate’s Comparison Tools for Competitive Rates

Bankrate is another tool you can use to compare rates for car loans. All you have to do is simply input the loan type, your ZIP code, the loan term, and your credit score. With that done, Bankrate will provide several options available for you. And you can sort the results.

Avoiding Common Pitfalls and Fees

The most common pitfalls to avoid include:

• Focusing on the monthly payment first, instead of negotiating the total car loan payment first
• Failing to budget for insurance premiums and other expenses
• Financing add-ons like fabric protection and extended warranties into the loan
• Walking into a dealership without a loan offer or pre-approval
• Going for long-term loans

Identifying Hidden Fees

When it comes to taking out car loans, the sticker price and the monthly payments are just part of the expenses. Other fees you should look out for include:

• Delivery fees
• Dealer preparation fees
• Documentation charges
• Prepayment penalties
• Disposal fees

Vigilance Against Discriminatory Practices

A few things you can do to watch against discriminatory practices are as follows:

• Look out for dealer markup disparities
• Consider differing treatments when you speak over the phone and when you walk into the dealership
• Watch out for add-ons that are not necessary but that the dealer insists on

Conclusion and Final Tips

Our recommendations for the best car loans for bad credit are Capital One, OpenRoad Lending, and CarMax. If you want loans without credit score considerations, you can check out CreditCube. Spotloan is ideal for emergency loans, but you won’t get much as a first-time borrower. If you need higher amounts for emergencies, consider Uprova.

Disclaimer: This article contains sponsored marketing content. It is intended for promotional purposes and should not be considered as an endorsement or recommendation by our website. Readers are encouraged to conduct their own research and exercise their own judgment before making any decisions based on the information provided in this article.