Best Car Loans for Bad Credit in 2025
— Comparison updated Apr 2025
Finding a car loan for bad credit can be tough as most lenders approve applicants with good to excellent credit. However, with Financer.com you can:
Apply for a car loan with a credit score of less than 690 Compare lenders online Apply for a car loan online in minutes
All unsecured personal loans through Upstart offer a fixed rate and range between 6.6% - 35.99% APR based on 5-year rates offered in March 2025. The lowest rates are only available to the most qualified applicants. Your APR will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will be approved.
If you're in the market for a car but your credit score isn't stellar, don't lose hope.
This guide will walk you through everything you need to know about bad credit car loans in 2025
What Is a Bad Credit Car Loan?
A bad credit car loan is an auto financing option designed for borrowers with poor credit histories, typically with credit scores below 619.
While these loans often come with higher interest rates, they provide an opportunity for individuals with less-than-perfect credit to secure the financing they need to purchase a vehicle.
Best Lenders for Car Loans with Bad Credit in 2025
We've researched and compiled a list of top lenders offering car loans for people with credit scores below 619. These lenders provide online applications and competitive terms for borrowers with challenging credit situations.
Top Bad Credit Car Loan Lenders
Capital One Auto Finance
Autopay
Digital Federal Credit Union
Prestige Financial
Credit Acceptance Corp.
LightStream
Carvana
Detailed Look at Top Lenders
Let's examine some of these lenders in more detail:
Comparison of Top Bad Credit Car Loan Lenders in 2025
To help you make an informed decision, we've compiled a comparison table of the top lenders offering car loans for bad credit. This at-a-glance view allows you to easily compare key features, interest rates, and eligibility requirements.
| Lender | Interest Rate Range | Minimum Credit Score | Loan Amount Range | Special Features | Best For |
|---|---|---|---|---|---|
| Capital One Auto Finance | Varies (not disclosed) | 500 | $4,000 - $100,000 | Pre-qualification with soft credit pull | Checking rates without impacting credit score |
| Autopay | 3.99% - 17.99% APR | 600 | $2,500 - $100,000 | Rate discounts available | Borrowers looking to refinance existing auto loans |
| Digital Federal Credit Union | 5.99% - 18% APR | No minimum | Up to $100,000 | Interest rate discounts available | Credit union members seeking flexible options |
| Prestige Financial | Varies (higher for bad credit) | No minimum | Not disclosed | Considers applicants with bankruptcy history | Those with recent bankruptcy filings |
| Credit Acceptance Corp. | Varies (higher for bad credit) | No minimum | Not disclosed | Works with unemployed borrowers | Those with very poor credit or no employment |
| LightStream | 7.24% - 15.19% APR | 660 | $5,000 - $100,000 | Unsecured loans available | Fast funding and flexible use of funds |
| Carvana | Varies (higher for bad credit) | No minimum | Not disclosed | All-in-one car buying and financing platform | Those who prefer an online car buying experience |
Please note that the interest rates and terms provided are general ranges and may vary based on your specific credit profile, income, and the vehicle you're purchasing.
Types of Lenders for Bad Credit Car Loans
When searching for a bad credit car loan, you have several options to consider:
Credit Unions: Often offer competitive rates, especially if you're already a member.
Online Lenders: Provide fast application processes and competitive rates. Easy to compare multiple offers.
Online Car Dealerships: Such as Carvana, offer both vehicles and financing options.
Traditional Car Dealerships: May have existing relationships with various lenders, including those specializing in bad credit loans.
How to Improve Your Chances of Getting Approved for a Bad Credit Car Loan
While bad credit can make it more challenging to secure an auto loan, there are steps you can take to improve your chances of approval:
Follow these steps to increase your chances of getting approved for a car loan with bad credit:
Get Prequalified
Many online lenders offer prequalification with a soft credit check, which won't impact your credit score. This can give you an idea of what rates you might qualify for.
Consider a Cosigner
Having a cosigner with good credit can significantly improve your chances of approval and may help you secure a lower interest rate.
Save for a Down Payment
A larger down payment reduces the loan amount, which can make lenders more willing to approve your application.
Improve Your Credit Score
Take steps to improve your credit score over time, such as paying bills on time and reducing your credit utilization ratio.
Shop Around
Compare offers from multiple lenders to find the best terms and rates for your situation.
The Impact of a Car Loan on Your Credit
While a bad credit car loan typically comes with higher interest rates, it can also be an opportunity to improve your credit score over time. Here's how:
Consistent, on-time payments can positively impact your payment history, which is the most significant factor in your credit score.
An auto loan adds to your credit mix, which can boost your score if you previously only had credit cards.
As you pay down the loan, your credit utilization ratio may improve, potentially increasing your score.
Red Flags to Watch Out For in Bad Credit Auto Loans
While many lenders offer legitimate bad credit auto loans, some may engage in predatory practices.
Being aware of these red flags can help you avoid costly mistakes and potential scams. Here are key warning signs to watch out for when seeking a bad credit car loan:
Common Red Flags in Bad Credit Auto Lending
Pressure to make an immediate decision
Focus solely on monthly payments
Unexplained or excessive fees
Conditional loans requiring add-ons
Yo-yo financing scams
Lack of transparency about loan terms
Requests for upfront payments
1. Pressure to Make an Immediate Decision
Legitimate lenders will give you time to review the loan agreement and think about your decision.
Be wary of any lender or dealership that pressures you to sign immediately or uses high-pressure sales tactics like "this offer is only good today."
2. Focus Solely on Monthly Payments
While affordable monthly payments are important, focusing solely on this aspect can mask a high total cost.
Some predatory lenders may offer low monthly payments but extend the loan term excessively, resulting in much higher overall interest paid.
3. Unexplained or Excessive Fees
Be cautious of loans with numerous or high fees, such as origination fees, processing fees, or prepayment penalties. Always ask for a breakdown of all fees and ensure you understand what each one is for.
4. Conditional Loans Requiring Add-ons
Some lenders may make loan approval contingent on purchasing additional products like extended warranties or gap insurance.
While these products can be beneficial, they should be optional, not required for loan approval.
5. Yo-yo Financing Scams
In this scam, a dealer lets you drive away with a car before loan terms are finalized. Days or weeks later, they claim the financing fell through and demand you sign a new contract with worse terms.
Always ensure financing is final before taking the car.
6. Lack of Transparency About Loan Terms
Reputable lenders will be upfront about all loan terms, including interest rate, loan duration, and any fees. If a lender is vague or unwilling to provide clear, written terms, consider it a red flag.
7. Requests for Upfront Payments
Be cautious of lenders asking for upfront payments via cash, gift cards, or wire transfers before approving your loan. Legitimate lenders typically deduct their fees from the loan amount rather than asking for money upfront.
If you suspect a lender of engaging in predatory practices, consider reporting them to your state's attorney general's office or the Consumer Financial Protection Bureau (CFPB).
Frequently Asked Questions About Bad Credit Car Loans
FAQs
Can I get a car loan with a credit score below 500?
Yes, it's possible, but it may be more challenging. You might face higher interest rates or need to provide a larger down payment. Consider lenders like Credit Acceptance Corp. or Prestige Financial, which specialize in very poor credit situations.
How much should I expect to pay in interest for a bad credit car loan?
Interest rates for bad credit car loans can range from 9% to over 20% APR. The exact rate depends on factors like your credit score, income, loan term, and the lender's policies.
Is it better to get financing from a dealership or an online lender?
Both options have pros and cons. Online lenders often offer more competitive rates and a streamlined application process. Dealerships might be more flexible with approval but could have higher rates. It's best to shop around and compare offers from both sources.
How long should my loan term be if I have bad credit?
While longer terms mean lower monthly payments, they also result in paying more interest over time. Aim for the shortest term you can comfortably afford. A 48 to 60-month term is often a good balance for many borrowers.
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