Auto Loan Rates for Bad Credit: 3 Best Providers (Feb. 2024)

Auto Loan Rates For Bad Credit

If you have bad credit and are shopping for a car, searching for auto loan rates for bad credit can quickly show you the effects of having a low credit score.

Interest rates are higher, and while long loan terms of five years or more can make a car seem more affordable, longer loans only increase the amount of interest being paid. Five years may not sound like a long time, but it will if you’re paying triple the interest rate someone with good or great credit would pay.

All isn’t lost, however. Finding the best low-interest auto loan if you have bad credit — also referred to as being a subprime buyer — is still possible. But before we get to that, it’s important to get an idea of the interest rate someone with bad credit would pay on an auto loan.

Average Rates | Loan Providers | FAQs

Average Auto Loan Interest Rates for Bad Credit: 14% – 20%

Lenders will offer high-interest rate nonprime auto loans to borrowers with credit scores of 660 or below, while borrowers with scores of 661-850 will likely get prime or super prime loan rates.

People with bad credit are likely to be offered subprime (501-600 credit scores) or deep subprime (300-500) loans at much higher interest rates that can be triple what borrowers with good credit would pay.

The average auto loan rate for new cars bought with subprime loans in Q4 of 2019 was 11.51%, and average loan rates for all used cars bought from independent dealers stood at 18.47% for the same period, according to Experian’s State of the Automotive Finance Market.

Experian State of the Automotive Finance Market, Q4 2019 Rates

For deep subprime loans, the average rate for a new car loan was 14.25% and the average rate for used cars purchased from independent dealers was 20.69%.

Those rates are about triple what they would be for borrowers with good credit. The prime loan rate for a new car averaged 4.75%, and a used car from an independent dealer averaged 6.77%.

Having bad credit affects auto loan interest rates so much because lenders view you as a high-risk borrower. Missed payments, defaulted loans, and a high debt-to-income ratio are all red flags that are often part of a low credit score. Lenders charge high interest rates when they’re not confident they’ll get the money they’re lending back.

Best Low-Interest Rate Auto Loans for Bad Credit

Some lenders specialize in auto loans for people with bad credit. The three companies we recommend don’t directly provide the loans but connect borrowers with their national networks of auto lenders and dealers.

Online applications are easy to fill out, and applicants can often get approved on the same day they apply.

  • Network of dealer partners has closed $1 billion in bad credit auto loans
  • Specializes in bad credit, no credit, bankruptcy and repossession
  • In business since 1999
  • Easy, 30-second pre-qualification form
  • Bad credit applicants must have $1500/month income to qualify
  • See application, terms, and details.


Overall Rating

Interest Rate In Business Since Application Length Reputation Score
3.99% - 29.99% 1999 3 minutes 9.5/10

Auto Credit Express can help you find an auto loan whether you have bad credit, no credit, or have gone through bankruptcy or had your car repossessed. Applicants must earn $1,500 per month to qualify. Its interest rates range from 3.99% to 29.99%, depending on your creditworthiness.

  • Free, no-obligation application
  • Specializes in auto loans for bankruptcy, bad credit, first-time buyer, and subprime
  • Affordable payments and no application fees
  • Connects thousands of car buyers with auto financing daily
  • See application, terms, and details.


Overall Rating

Interest Rate In Business Since Application Length Reputation Score
Varies 1994 3 minutes 9.0/10 specializes in auto loans for those who have bad credit, past bankruptcies, or are first-time buyers. Same-day approval is available from the site, which connects thousands of car buyers with auto financing daily.

Up to four loan offers can be made within minutes of filling out an online application at Borrowers can receive an online loan certificate or check within 24 hours. Each lender sets its own rates and terms.

Can I Get a Low-Interest Car Loan with Bad Credit?

Yes, though it depends on what you consider to be low interest. An auto loan interest rate for someone with fair credit could qualify for an interest rate that’s almost a third of what a subprime borrower would pay.

You may think loan rates on used cars are lower than rates for new cars, but the opposite is true. Lenders have little interest in repossessing used cars because they have lower resale value than new cars, which partly leads to higher interest rates on used-car loans.

The average interest rate on all used-car loans for subprime borrowers was 16.88% in Q4 of 2019 — about 5% higher than the average rate for new car loans for the same subprime borrowers. For prime borrowers, the difference in average loans rates wasn’t as severe: 6.15% for all used-car loans versus 4.75% for new-car loans.

The best place to get a car loan when you have bad credit is from online lenders. They don’t have the overhead that branded dealerships and banks have, allowing them to make loans to people with low credit scores.

Just know ahead of time that such offers usually come with higher interest rates.

Can I Get a Car Loan with a Credit Score of 500?

A 500 credit score shouldn’t prevent you from getting an auto loan, but realize that you’re in a category of bad credit that falls below subprime loans.

It’s called “deep subprime” and is for credit scores of between 300 and 500, according to Experian. Push your score up to 501 and you’re in the subprime loan category.

Credit Score Categories

Deep subprime is where the highest interest rates on car loans live. Such loans for used cars can reach 20%. New car buyers can get a bit of a break, however, with the average loan rate for deep subprime borrowers standing at 14.25% in Q4 of 2019.

Your interest rates will improve by at least 2% if you can boost your credit score enough to become a subprime borrower.

The top auto loan providers recommended above all work with people who have bad or no credit.

Is a 72-Month Car Loan Bad?

One way to make a monthly car loan payment affordable is with a longer loan term. Three-year (36 months) car loans used to be common, but five years (60 months), six years (72), seven years (84) and even eight years (96) are now possible.

Stretching payments out over several years is how many borrowers make car payments more affordable. In fact, longer-term loans continue to dominate the market. Just over 40% of new car loan terms were 61 to 72 months long and another 30% were financed for as long as 73 to 84 months in the fourth quarter of 2019, according to Experian.

Paying a car loan for six years can be a lot more expensive than paying back a four-year loan. Here’s how a 72-month car loan works out compared to a 48-month loan, based on the average new car loan amount of $30,836 at an average rate of 11.51% for subprime borrowers:

72- vs. 48-Month Auto Terms

So, is a 72-month car loan bad? If paying $4,220 more in interest over two extra years of payments is money you’d rather keep for yourself, then yes.

A Higher Credit Score Means Lower Rates

Having bad credit can mean paying higher rates on auto loans, but remember, different categories of bad credit charge different interest rates.

Simply improving your credit score so you go from being a deep subprime borrower to becoming a subprime borrower can cut your loan rate by a few percentage points, and improving your credit score to that of a nonprime borrower can make your auto loan almost half as expensive. Boost your credit score to 661 or better to get in the prime loan category, and rates drop a lot more.

But if you need a car now and don’t have time to increase your credit score first, then an auto loan for bad credit may be your best option. When your score does eventually improve after making consecutive on-time payments to your auto lender, it could create a chance to refinance your auto loan and get a cheaper rate in the future. That can be like putting money in your pocket.

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