An imperfect credit score can be a barrier to obtaining favorable terms on auto loans. Fortunately, even if your credit history has some blemishes (think scores below 670), it still has many characteristics of auto loans from credit unions and other monetary institutions. And comparing those features is getting the most productive deal possible.
CNBC selects more than a dozen auto lenders based on the types of loans offered, their affordability, credit needs, and the buying experience they offer. Here are our most sensible picks for auto lenders who cater to consumers with bad or fair credit. (Learn more about our method below. )
From 7. 24%
New vehicles, used vehicles, refinances, parties and lease purchases.
Starting at $8,000 (or $5,000 for refinancing)
24 months
FICO of 575 or higher
None
Varies by lender
Conditions apply.
Who is it for? MyAutoloan is a great option if you have bad credit and need to shop for the lowest rate imaginable. This online marketplace connects car buyers and lenders based on their desires and the information they provide.
Big Pros: MyAutoloan does the heavy lifting for you and will provide you with up to 4 pre-qualified loan offers when you fill out a short form. It uses a convenient credit check to connect you with lenders, so comparing offers may not affect your credit score; Only get a thorough consultation if you request an offer.
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From 6. 85%
Used Vehicles
Unspecified
36 to months
not specified
None
$5 after a one-day grace period
Conditions apply.
Who is it for? Carvana can be a smart choice if you’re shopping for a used car and want your car buying experience to be completely online.
Great benefits: Carvana allows you to prequalify in two minutes without affecting your credit score, cars come with a 7-day money-back guarantee, and the car is delivered right to your door.
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Depends on the profile
New vehicles, used vehicles, refinancing.
From $4,000
36 months
not specified
None
It’s in the lender
Conditions apply.
Who is it for? Capital One Auto Finance is an option if you have bad credit and prefer to get an auto loan from a national bank to take advantage of competitive rates.
Exceptional Benefits: Capital One’s Auto Navigator tool allows you to pre-qualify for offers that don’t have an effect on your credit score and adjust the terms based on your needs.
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Not disclosed
Used vehicles
From $500
36 months
not specified
None
It varies by state and contract.
Conditions apply.
Who is it for? CarMax Auto Finance is worth considering if you’re buying a used car and need a large inventory.
Exceptional Benefits: CarMax allows you to adjust your desired monthly payment and APR to get customized terms for your pre-qualified offers in minutes. It also allows you to upgrade your financing at no cost if you find a higher APR within 3 deals. days of your purchase.
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From 4. 67%
New and used vehicles, loan refinancing, acquisitions.
$2,500 to $100,000
24 to months
not specified
None
Varies by lender
Conditions apply.
Who is it for? Automatic payment can be a great option for car owners with imperfect credit who want to refinance their vehicle.
Notable Benefits: While you can still finance an automatic payment on a new or used vehicle, it stands out with its abundance of refinancing options. This includes classic and cashback financing, as well as lease financing.
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MyAutoloan works with a few lenders that specialize in working with consumers experiencing credit problems. It offers other types of loans, including new and used auto loans, refinancing, and lease buybacks. MyAutoloan will also settle with co-signers.
The procedure is quick and convenient, just fill out a quick and confidential form. You will then get up to 4 pre-qualified offers for you to determine. Prequalification has no effect on your credit score, but the lender who decides to use it will perform a thorough check on your credits once you apply.
Purpose of the loan
New vehicles, used vehicles, refinances, parties, and lease acquisitions.
Are co-borrowers allowed?
Yes
Credit Score Requirements
575
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Known for its vehicle vending machines, Carvana makes auto loans on its inventory and works with consumers of all types of credit and accepts collateral. As with the other lenders on this list, you can prequalify for a thorough credit check to get estimated financing terms.
Once you’re pre-qualified, you’ll see traditional situations under the symbol of every car you see on the Carvana website. After you purchase a vehicle and schedule pickup or delivery, Carvana will perform a thorough credit check and provide you with the finalized form. terms of your loan.
Purpose of the loan
Only used cars
Are co-borrowers allowed?
Yeah ,
Credit score requirements
Carvana requires a minimum credit score, but some of its lenders may
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With Capital One Auto Finance, you can search for a new or used car with the bank’s online Auto Navigator tool. While you can only choose from one of the attractive car dealerships, according to Capital One, it currently works with more than 12,000 dealerships.
Capital One allows you to prequalify without a thorough credit check, you’ll only get a complete application when you’ve fully submitted your application. You can also upload a co-applicant to help you get approved and take advantage of more favorable terms. Once pre-qualified -qualified, you will be able to see the expected rates and monthly bills for available cars.
Purpose of the loan
New vehicles, used vehicles, refinancing
Are co-borrowers allowed?
Yes
Credit score requirements
No ads
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As the largest used car store in the United States, CarMax Auto Finance also provides financing for the cars it sells. There is no minimum score requirement as CarMax’s wide diversity of investment resources allows them to work with clients with other credit profiles.
You can use the retailer’s prequalification tool to get traditional terms, such as APRs and monthly payments, without affecting your credit. CarMax offers a 3-day payment schedule if you find a better loan offer within 3 days of finishing your CarMax. loan.
Purpose of the loan
Used cars only
Are co-borrowers allowed?
Yes
Credit Score Requirements
It is not advertised, but the dealership claims that its financial resources are for maximum credit profiles.
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Autopay is an online platform that partners with financial institutions that provide auto loans, allowing the company to interact with consumers in a variety of credit situations. In addition to new and used auto loans, Autopay offers a variety of refinancing products, adding classic and cash-back refinance and full-lease refinancing.
All you need is a flexible credit application to prequalify and you can upload a co-applicant. Once pre-qualified, you can compare offers from various banks and credit unions to determine which is the most productive offer. If you want to move forward, the lender will conduct a thorough check on your credit and review your documents for final approval, which can take up to two days.
Purpose of the loan
New and used vehicles, loan refinancing, lease purchase.
Are co-borrowers allowed?
Yes
Credit score requirements
Unannounced, the dealership says it has worked with borrowers of all credit profiles.
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A bad credit car loan is a car loan with a lower credit score. While there is no precise number, those with a score below 580 would likely have a harder time securing investments through classic loans from banks or credit unions.
In fact, it is possible to get a car loan with a credit score of 500, even if it is considered a bad score. Your most productive bet would be to work with a lender that is known for lending to other people with poor credit. history. Since having a credit score of 500 is a significant threat to the lender, they will most likely give you a higher interest rate on the loan than if you had a higher score. If possible, improve your creditsss before applying for a loan to obtain more favorable conditions.
Typically, the number one scoring models used for auto loan approval are Vantage Scores 3. 0 and 4. 0, FICO® Auto Score, and FICO® Scores 8 and 9.
While individual interest rates for auto loans vary depending on several factors, based on Experian’s fourth-quarter 2023 auto finance market insights, the average new auto loan rate for subprime borrowers (scores of 300 to 500) is 14. 78%. and 12. 28% for loans for subprime cars. borrowers (501 to 600). Interest rates are even less favorable for used cars, reaching 21. 55% for subprime borrowers.
Related: Tips to Quickly Boost Your Credit Score
There are several tactics to increase your chances of getting approved for a car loan. Here are some of the key ones:
Before applying for an auto loan, it’s essential to estimate your monthly payments. CNBC Make It offers a convenient loan calculator that can help you see how much you pay per month, how long it will take to pay off the debt, and how much you pay in interest.
If you have bad credit, getting approved for a car loan without a collateral would possibly be more difficult, but it’s still possible. Some lenders work with customers of all credit profiles. That said, you’re more likely to qualify for a loan with a high interest rate, which will make your car more expensive. Be sure to shop around and get loan offers so you can compare terms and choose the option that best fits your budget.
An express minimum credit score is not required to finance a vehicle. Credit needs vary by lender, as the lender has its own policies on how they compare loan applications.
Additionally, while your credits may be strong, lenders also take into account other monetary factors, such as your source of income and other debts. The more signs they find that you are more likely to repay the loan on time and in full, the better your chances of being approved.
Financing a car through a bank or credit union can help you get a lower interest rate, especially if you already have a positive relationship with the institution; For example, you have a car loan that you pay on time.
On the other hand, it could be more complicated to obtain bank financing if your credits are imperfect. In addition, dealerships can offer you a more comfortable experience. While a bank may take some time to review your application, you can go to a dealership. and leave the parking lot with your new car the same day.
October through December are generally the most productive months to buy a car, as you’re most likely to find discounted deals at the end of the year. Plus, the December Christmas sales will offer the opportunity to save even more.
Although it is possible to get an auto loan with a 500 credit score, it will be more difficult to find a lender and the loan terms will likely be less favorable.
Although it depends on each individual, myAutoloan works with lenders who specialize in working with consumers facing credit issues.
It’s possible to get a car loan with a score of six hundred credits, but you may have stricter loan terms than with a higher score.
At CNBC Select, our goal is to provide our readers with high-quality journalism and comprehensive customer recommendations so they can make informed decisions with their money. Each auto loan directory is based on rigorous reporting by our team of trained writers and editors with deep knowledge of loan products. While CNBC Select obtains a commitment from its partner partners on many offers and links, we create all of our content without intervention from our sales team or external third parties, and we are proud of our journalistic standards and ethics. Check out our methodology to learn more about how we select the most productive auto loans for bad credit.
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To find out which auto loans are most productive for consumers with bad credit, CNBC Select analyzed more than a dozen auto loan providers, adding banks, dealerships, and online marketplaces.
When limiting and qualifying auto loans, we focus on the following features:
Advertised rates and repayment structures for auto loans are very likely to vary depending on the Federal Reserve rate. However, once you accept your loan agreement, a fixed-rate APR will ensure that your interest rate and monthly payment remain constant throughout the period. of the loan. Your APR, monthly payment, and loan amount depend on your credit history and creditworthiness. To get a loan, many lenders will perform a thorough credit check and request a completed application, which may require proof of income, identity verification, driving evidence, and more.
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