How to get a new car loan with bad credit

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Find Your Next Car
10 Best Bad Credit Car Loans Lenders
Auto Loan Calculator
Purchase Loan Calculator
Refinance Calculator
Auto Approve
Ally Clearlane
Bad Credit Car Loan Rates
Applying for a Car Loan With Bad Credit
Bad Credit Car Loan Information
What To Do If You Get Denied for a Bad Credit Car Loan
Bad Credit Car Loan: Conclusion
Auto Loans for Bad Credit: FAQ
Frequently Asked Questions
Our Methodology

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Canadians with bad credit (or no credit) often have a more difficult time getting approved for car loans. But it doesn’t have to be that way! When it comes to bad credit car loans, new opportunities are on the horizon. There are lenders, dealerships, and retailers that specialize in helping bad credit customers find affordable car finance. We reveal how you can get a car loan with bad credit. It might be easier than you think.

Find Your Next Car

In 2022, the Best Car Loans for Bad Credit Are Provided by Ally Clearlane, Auto Approve, myAutoloan, Prestige Financial and Capital One

When you have bad credit, trying to find a car loan to purchase a vehicle can be stressful. Bad credit car loans typically come with higher interest rates and may require large down payments. However, there are options available when it comes to auto loan providers that specialize in bad credit car loans.

In this article, we at the Home Media reviews team will explain the loan application process and provide you with tips to help increase your chances of getting approved. Based on our research, we’ll also recommend several auto lenders that offer services to people with poor credit including some that offer the best auto loan rates or best auto refinance rates of 2022.

10 Best Bad Credit Car Loans Lenders

We’ve compiled a list of 10 auto loan provider recommendations to help you get started with your search. The company that’s best for you will depend on your circumstances. We recommend reaching out to lenders to shop around for the best loan terms.

Auto Loan Provider	Minimum Credit Score Required	Minimum Annual Income
Ally Clearlane	580	$24,000
Auto Approve	No minimum credit score	Not specified
myAutoloan	575	$21,600
Prestige Financial	No minimum credit score	Not specified
Capital One	No minimum credit score	$18,000
Carvana	No minimum credit score	$10,000
Carmax	No minimum credit score	Not specified
Credit Acceptance Corp.	No minimum credit score	Not specified
New Roads	No minimum credit score	Not specified
AutoPay	575	Not specified

We’ve provided information below on three of the best bad credit car loan providers.

myAutoloan

Starting annual percentage rate (APR): 3.99% for new cars, 4.24% for used cars
Loan amounts: $8,000 minimum
Loan terms: 12 to 84 months
Availability: 48 states (not available in Alaska or Hawaii)
Minimum credit score: 575

The myAutoloan marketplace allows you to compare when you shop for new and used auto loans, refinance auto loans and lease buyout loans. Rates for new car loans start as low as 3.99% for borrowers willing to finance their vehicles for 36 months or less. Since myAutoloan functions as a marketplace for lenders and has a minimum credit score requirement of 575, it offers more opportunities for borrowers to get approved.

Read more: myAutoloan review

Auto Loan Calculator

New Loan

Refinance Loan

Purchase Loan Calculator

Price of the car you want

Length of loan(months) 12

Breakdown

Car price $ 0

Down payment $ 0

Length of loan (months) 0

Annual interest rate % 0

Total interest paid $ 0

Get Best Rates

Breakdown

Loan Amount $ 0

Current Payment $ 0

New Payment $ 0

Monthly Savings $ 0

Total Savings $ 0

Refinance Calculator

Remaining Loan Terms in Months

New Loan Terms in Months 12

Auto Approve

Starting APR: 2.94%
Loan amounts: $5,000 to $85,000
Loan terms: 12 to 84 months
Availability: 50 states
Minimum credit score: None

Auto Approve is an auto refinance and lease buyout specialist. It doesn’t offer auto loans for new or used vehicles. Rates start at 2.94% APR for refinancing, though only borrowers with high credit scores will qualify for the best auto loan rates. People with bad credit who want to refinance their vehicle loans may get approved by Auto Approve, as the company does not have a minimum credit score requirement.

Read more: Auto Approve review

Ally Clearlane

Starting APR: 4.74%
Loan amounts: Varies
Loan terms: Varies
Availability: 48 states (not available in Nevada, Vermont or Washington, D.C.)
Minimum credit score: 580

Ally Clearlane is part of Ally, which is one of the largest car finance companies in the U.S. The lender only offers auto loan refinancing and lease buyout services. According to our research, APRs for refinancing start as low as 4.74% and loan terms of up to 72 months are available. Ally Clearlane has a minimum credit score requirement of 580, making it easier for those with less-than-excellent credit to get approved.

Bad Credit Car Loan Rates

Bad credit is defined as a person’s inability to pay bills on time and the likelihood of failing to make future payments. This is typically reflected in a FICO score of 579 or lower.

If your credit score falls below this threshold, you may not be eligible for all loans and could face higher interest rates. The tables below show average auto loan interest rates by credit score for new and used cars, according to Experian’s State of the Automotive Finance Market Q2 2022 report.

Buyers with poor credit scores under 660 receive higher interest rates. Note that interest rates are also higher for used cars than for new cars. If your budget is tight and you can only afford a used vehicle, you will pay less overall but have a higher interest rate.

Applying for a Car Loan With Bad Credit

Even if you have bad credit, you have several auto financing options to choose from — you just need to find the right lender for your situation.

There are four types of lenders you can reach out to, including:

Online lenders: Online lenders are convenient because you can find out whether you have been approved for a new loan within minutes. These lenders may also provide you with a lower interest rate since they have lower overhead costs. Online lenders are also more likely to offer preapproval so you can get an idea of your loan payment and interest rate before you make a purchase.
Banks: Many national and local banks offer car loans. However, some banks may only allow you to get a loan through dealer-arranged financing.
Credit unions: Most credit unions offer car loans with low interest rates. You may be able to apply for a car loan directly or through a dealership. The only downside is that you may have to be a member of the credit union to qualify for its offerings.
Car dealerships: Many dealerships offer their own financing options for car buyers. And if they don’t, others will shop around for you through dealer-arranged financing.

Bad Credit Car Loan Information

To apply for a car loan, you’ll need to have certain information handy, including:

Your name, address and phone number
Your Social Security number
Your credit score
Gross annual income information
Vehicle information like the model, age and mileage of the vehicle you wish to purchase or refinance

Some financial institutions may also ask for additional information before a loan is approved:

Pay stubs
Driver’s license
Personal references

What To Do If You Get Denied for a Bad Credit Car Loan

When you apply for a car loan or refinancing, you may not be approved the first time. This could be because of your bad credit score or a lack of established payment history. Here are some tips that can help you increase your chances of getting approved by an auto loan lender:

Apply with a co-signer	You can ask someone you trust to co-sign a bad credit auto loan. By co-signing, the person agrees to pay back the loan if you default.
Buy a car with cash	If you can afford to buy a vehicle with cash, it might be your best option — even if it’s not the car of your dreams. Owning a car outright means you don’t risk repossession. And since you don’t owe any money on it, it can be considered a financial asset, rather than a liability. This can help bring your credit score up for future car shopping.
Make a large down payment	If you make a large down payment when purchasing your used or new car, it will decrease the loan amount. This makes it more likely that a lender will approve your loan since it is reducing the overall risk.
Buy from a private seller	If you’re looking to purchase a used car, you will typically pay less by purchasing from a private seller rather than a dealership. These purchases can be financed with a private party auto loan.
Improve your credit score	Raising your credit score takes time, so it won’t help you get car financing in the short term. But increasing your score by paying off credit cards and always making payments on time will eventually improve your FICO score, which is the best way to get better rates.

Bad Credit Car Loan: Conclusion

If you have bad credit, you still have options for auto loans. 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, but you don’t have to settle for the first offer you come across. We recommend that you shop around and compare options to find the best auto loan for you.

Auto Loans for Bad Credit: FAQ

Below are some frequently asked questions about bad credit auto loans.

Frequently Asked Questions

Our Methodology

Because consumers rely on us to provide objective and accurate information, we created a comprehensive rating system to formulate our rankings of the best auto loan companies. We collected data on dozens of loan providers to grade the companies on a wide range of ranking factors. The end result was an overall rating for each provider, with the companies that scored the most points topping the list.

Here are the factors our ratings take into account:

Reputation (30% of total score): Our research team considered ratings from industry experts and each lender’s years in business when giving this score.
Availability (20% of total score): Companies that cover a variety of circumstances are more likely to meet borrowers’ needs.
Loan Details (15% of total score): We considered the types of loans, term lengths and loan amounts that are available from each lender to determine this score.
Rates (25% of total score): Auto loan providers with low APRs scored highest in this category. Available discounts were also taken into account.
Customer Experience (10% of total score): This score is based on customer satisfaction ratings and transparency. We also considered the responsiveness and helpfulness of each lender’s customer service team.

In this article, we selected companies with low or no minimum credit score requirements and low minimum annual income requirements.

*Data accurate at time of publication.