Guide to Finding the Best Bad Credit Auto Loans for People with Bad Credit


When your car finally sputters to a screeching halt for the last time, you know that it’s time to buy a new car. But are there really any financing options for people who happen to have bad credit?

Finding auto loans for bad credit can be a difficult endeavor, with a lot more hoops to jump through and loans to sift through. The good news is that bad credit auto loans are available – if you know where to look.

Image Source: Best Bad Credit Auto Loans

AdvisoryHQ understands that not everyone has a polished and pristine credit score that makes them attractive to the average lender.

That’s why we want to help you review how to get an auto loan with bad credit. Having a low credit score shouldn’t impact you from having transportation, but you should be sure that you understand the financial implications on even the best bad credit auto loans.

So, where can you find the best bad credit auto loans? Let’s find out!

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How Bad Is Your Credit?

Before you can really dig deep into finding the best bad credit auto loans, you need to have some idea of where you credit score falls.

Some lenders will offer auto loans with bad credit scores for individuals who have a score just under 650 while others are geared more towards offering auto loans for bad credit scores closer to 300. Understanding where you fall on the credit continuum will allow you to know which of the lenders will be able to offer you the best bad credit auto loans.

You can gain insight into your credit score through a number of means, but keep in mind that most lenders are going to be looking at your FICO score.

There is an estimator available on the myFICO website to help you gauge where your credit score could be as well as an option to purchase access to your FICO credit score. This is the best way to see the exact same numbers that most lenders will be reviewing during your application process for bad credit auto loans.



If paying for access to this information doesn’t appeal to you, you can view your VantageScore credit score for free through sites like Credit Karma. While this does give insight into how to improve your credit score, it isn’t likely that lenders will look at this score regarding bad credit auto loans. However, it can give you more information as to how you’re doing and offer recommendations for tangible next steps for improvement.

When you consider your credit, most lenders that offer the best bad credit auto loans are also likely to look at the rest of your debt. Reducing the amount of debt that you have overall can be a great tool towards qualifying for better auto loans for bad credit.

Every lender’s debt-to-income ratio will be slightly different, but this is another stipulation that you may want to consider before you apply for an auto loan with bad credit. Reducing your debt can help you to improve your credit score and qualify for better bad credit auto loans.



Best Bad Credit Auto Loans

Having a bad credit score doesn’t necessarily mean that you can’t qualify for some of the best bad credit auto loans on the market today.

You should be aware that you likely won’t qualify for some of the more favorable terms and interest rates that you see on advertisements though. Lenders are more likely to charge higher interest rates on auto loans for people with bad credit to make up for the risk they are taking on the loan.

Companies that advertise no credit checks and guaranteed approval without income requirements or other restrictions are likely to be “buy here, pay here” lots which you should avoid. Finding auto loans for bad credit through this type of dealership may sound easy, but their business practices can be sketchy at best. Many times, their vehicles are sold, repossessed, and then sold again to you without much guarantee on the quality of the vehicle.

Be sure to shop around a little bit, even if you know that you’re looking for one of the best bad credit auto loans on the market. Your credit, low though it may be, can still withstand having a handful of inquiries.

Credit reporting agencies recognize that you’re attempting to make a wise financial decision and get the best rates. There is usually a 14-day grace period where they will count multiple inquiries as one single entity. 

Armed with the knowledge of your FICO or VantageScore credit score and what to expect, it’s time to take a closer look at which lenders offer the best bad credit auto loans.

We’ll cover what you need to know to figure out how to get an auto loan with bad credit. You won’t have to look any further to find a great selection of auto loans for bad credit.

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Auto Credit Express

Image Source: Auto Credit Express

Most experts would agree that purchasing a brand new car is likely unwise when you need auto loans for people with bad credit.

In many situations, lenders that offer bad credit auto loans exclude vehicles that have high mileage, older year models, and lower loan amounts. Unfortunately, these tend to be the types of bad credit auto financing that these types of individuals could afford while they work on improving their credit score. The biggest draw to Auto Credit Express’s auto loans for bad credit is its openness to any and all of these factors.

The best bad credit auto loans through Auto Credit Express can be applied for in just three minutes online. Just because you have a low credit score doesn’t mean that you have to sacrifice convenience, and this online lender can definitely offer that. What are the requirements for its bad credit auto loans?

  • Monthly gross income of $1,500 or more
  • Minimum age requirement of 18 years old
  • Employed full time or guaranteed fixed income
  • Legal citizen and resident of the U.S. or Canada

Auto Credit Express is more like a broker for bad credit auto loans. It pairs you with different lenders and dealerships that can provide you with an offer for an auto loan with bad credit based on the information provided in your short application.

By comparing several offers from various lenders, you can weigh the different terms and conditions to make sure you’re getting one of the best auto loans for bad credit individuals.



Capital One

Image Source: Capital One

Capital One auto loans for bad credit gives you the option of putting a well-known financial institution behind your bad credit auto loans. While some people may not mind using a lender that feels more obscure, others prefer the security that accompanies a more recognizable household name.

Unfortunately, it does have a few more restrictions on the value and age of the car that you get with its auto loans for people with bad credit.

If you were hoping for an auto loan with bad credit for a car that only costs a couple thousand dollars or is for sale on Craigslist, then you might be out of luck. Capital One doesn’t issue loans for less than $7,500 (or more than $40,000) or bad credit auto loans for cars purchased through private sellers.

You’ll have to purchase through one of its eligible dealers. Not only that, but the car must be seven years old or newer to qualify for one of its best bad credit auto loans.

While it does not list a minimum credit score requirement for approval, The Simple Dollar notes that its auto loans for people with bad credit makes it one of the top choices for people who fall into this category.

Related: How to Refinance Auto Loans with Bad Credit | This Year's Guide | Bad Credit Auto Refinance



Carvana

Image Source: Carvana

Carvana offers some of the best bad credit auto loans but with a unique twist. While Auto Credit Express and Capital One offer auto loans for bad credit through dealerships and third-party sources, Carvana only provides bad credit auto loans for vehicles purchased through its website. The good news is that all of the vehicles it provides best bad credit auto loans for are accident-free and subject to a 150-point certification process prior to being listed for sale.

Not only can you apply for its best bad credit auto loans from the convenience of your own home, but you can also purchase the car from the exact same spot. It can calculate trade-in values and arrange your bad credit auto loans with just twenty minutes at your computer. The car is then delivered or picked up by you, with a seven-day test period before you commit to your obligation on auto loans for bad credit.

Unfortunately, the minimum requirements for its best auto loans for bad credit aren’t easily found on the website. NerdWallet was able to track down some information on what the requirements are when it comes to Carvana’s auto loans for bad credit, and the minimum required credit score is listed at just 300.



My Auto Loan

Image Source: My Auto Loan

Myautoloan.com is another viable source for some of the best bad credit auto loans, giving you several options for auto loans with bad credit with just one application. The company promises that, in just minutes, your singular application can yield up to four offers, allowing you to compare terms and rates from various lenders.

It has some pretty clear guidelines on the minimum requirements for an auto loan with bad credit, including:

  • Must be over the age of 18 (or your co-qualifier must be over the age of 18)
  • Minimum monthly income of $1,800 or an annual income of $21,600
  • No open bankruptcies
  • Must reside in the continental United States

If you meet all of the minimum requirements, what can you expect to be able to purchase with an auto loan with bad credit? My Auto Loan does have a few minimum vehicle requirements as well. For example, you cannot purchase a car more than eight years old, and it has to have fewer than 100,000 miles on it. This can definitely exclude a lot of cheaper options when it comes to making a purchase, which might work out well since its minimum for auto loans with bad credit is $8,000.

Finding its minimum required credit score is difficult, as bad credit auto financing is determined on a case-by-case basis. Other sources claim that its minimum credit score is 475 in order to be granted bad credit auto loans through one of the lenders.

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Refinancing in the Future

Continue making timely payments on your bad credit auto loans (and demonstrate the same type of consistency in other aspects of your finances), and you’re likely to see your credit score increase over time.

This might seem unfortunate since you’re stuck with the subprime interest rates and less-than-favorable terms on auto loans for bad credit individuals for the length of your loan term. If this is the case, you might not be as stuck as it feels like you are.

When your credit score begins to rise, take into account that you could always refinance your vehicle and get rid of those bad credit auto loans you’ve had. Refinancing with an improved credit score could help you to get a lower interest rate, and you may even be able to shorten your loan term as well.

You’ll have more options for lenders, and it won’t be as strict as it was when you were learning how to get an auto loan with bad credit.

You may want to consider Capital One if you decide to refinance your car loan. Since it doesn’t cater to just bad credit auto financing customers, you may find favorable rates that are in line with other aspects of the market. If your credit score has drastically improved, you may be able to refinance at a local credit union or bank as well. Credit unions are well known for offering the lowest interest rates on most loan types.

Consider applying with your personal bank as well. Since you already have a relationship established there, and you have a history of making marked improvements on your credit scores, you might be able to leverage that relationship. You may find that you receive the most favorable terms on an auto loan with bad credit through one of these avenues.


Conclusion

Finding auto loans for bad credit can be a difficult endeavor. After all, not many lenders are interested in offering bad credit auto financing because it poses a serious risk to them. AdvisoryHQ understands that sometimes you still need transportation in order to make it to work and back; otherwise your credit score will never improve.

That’s why we have compiled this list of some of the best auto loans for bad credit we could find.

If you need to purchase a new set of wheels to get you around town, we hope that you’ll make a sensible decision. Evaluate what your needs really are when it comes to a new car, and then search for something that you would consider affordable. The best bad credit auto loans are still likely to have high interest rates, but at least you can begin to move forward.

Don’t let bad credit auto financing hold you back from improving your financial situation. With these best bad credit auto loans, you can buy that new car and make some headway on improving your credit score all at the same time.

Read More: Best Auto Refinance Companies | How to Find the Best Place to Refinance a Car



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