Bad Credit Auto Loans in California for 2024

California is well known for its strict consumer loan and credit card protection laws. It’s no surprise that its vigilant lawmakers have added a couple of rules in recent years affecting the state’s auto loan industry. 

The lenders in this review operate in California and provide auto financing to folks with a limited or bad credit history. That’s super useful to Los Angeles residents who absolutely need cars to get around — no cable cars a la San Francisco. 

Subprime borrowers in the Golden State can rely on these lenders to deliver bad credit financing efficiently and at a reasonable interest rate range.

These lenders allow California residents to submit an online finance application for an auto loan. All conform to the state’s laws that protect consumers from predatory lending practices.

1. Auto Credit Express

APPLY HERE »

• 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.

★★★★★

4.9

Overall Rating

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

Many lenders in the Auto Credit Express loan finding service offer flexible loan term schedules, small down payments, and economical service plans. Californians, if married, may apply for separate, individual accounts. When you submit a finance application online, you must provide proof of income through a recent pay stub or bank statement.

2. LendingTree

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• Auto loans for purchase, refinance, and lease buyouts
• Nationwide lender network
• Get matched with up to 5 lenders that fit your financial profile
• It only takes a few minutes and is free with no obligation
• See application, terms, and details.

★★★★★

4.7

Overall Rating

Interest Rate	In Business Since	Application Length	Reputation Score
Varies	1998	4 minutes	9.5/10

LendingTree is a lending network that can connect bad credit borrowers to various lenders and dealers in California. It advises that California residents can opt out from disclosing personal information to any third party for marketing purposes. Additionally, married Californians may include their spouse’s income even when requesting a separate account.

3. myAutoloan.com

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• Loans for new, used, and refinancing
• Queries a national network of lenders
• Bad credit OK
• Get up to 4 offers in minutes
• Receive online loan certificate or check within 24 hours
• See application, terms, and details.

★★★★★

4.6

Overall Rating

Interest Rate	In Business Since	Application Length	Reputation Score
Varies	2003	2 minutes	8.5/10

myAutoloan.com makes it easy to get bad credit financing and connect to the California dealership of your choice. The website discloses that married applicants in California may apply for separate accounts. It also describes state residents’ rights under the California Consumer Privacy Act of 2018.

4. Car.Loan.com Auto Loans

APPLY HERE »

• 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.

★★★★★

4.5

Overall Rating

Interest Rate	In Business Since	Application Length	Reputation Score
Varies	1994	3 minutes	9.0/10

Internet Brands operates Car.Loan.com Auto Loans, CarsDirect.com, and Auto Credit Express from its El Segundo, California headquarters. The loan-finding website is a marketplace where lenders and car dealers agree to ethical business practices, and borrowers receive education about what to expect during the bad credit auto loan process.

5. PenFed Credit Union

APPLY HERE »

• Prequalify in minutes without impacting your credit score
• Refinancing loans save an average of $191 per month
• 125% financing available for cash-out refis
• PenFed Credit Union membership required but can be applied for at the same time as your loan
• See application, terms, and details.

★★★★★

4.1

Overall Rating

Interest Rate	In Business Since	Application Length	Reputation Score
5.19% and up	1935	5 minutes	8.5/10

PenFed Credit Union offers direct auto loans to its members in all 50 states. Anyone can join the credit union by opening a checking or savings account. PenFed has two locations in California, one in San Diego and another in Salinas, but you can complete the entire application process online.

Subprime auto loans allow consumers with a fair or poor credit history to obtain financing to purchase a used or new car. They have a higher annual percentage rate range than prime auto loans, and approval may require a larger down payment or a trade-in. 

Subprime credit results from financial mistakes such as missing a monthly payment or defaulting on debts. The best way to rebuild credit is to pay your bills on time and keep your debt levels relatively low.

A financed car serves as collateral for an auto loan. The lender can repo your vehicle if you miss a payment. On the other hand, accessing auto financing is easier than obtaining unsecured debts, such as personal loans, even if you don’t have good credit.

California prides itself on consumer protection, as the following state laws illustrate. 

Loan Caps

In 2019, the California Legislature passed the landmark Fair Access to Credit Act, which capped interest (including auto loan rates) at about 36% and the fed funds rate on most consumer loans of up to $10,000 from state-licensed lenders. The law requires installment loans to have a minimum monthly payment loan term of 12 months and limits administrative fees to $75. These caps took effect on January 1, 2020, and apply to car loan rates. 

The law also requires lenders to obtain licenses to do business in California. Until this recent law, licensed lenders were exempt from state usury laws for consumer loans greater than $2,500. Additionally, the law bans consumer loans from having prepayment penalties.

GAP Waivers

The California governor signed a law in 2022 protecting consumers from abusive guaranteed asset protection (GAP) waivers. A GAP waiver, as opposed to GAP insurance, supplements an auto loan or lease.

It is an agreement to absolve you from a shortfall if your vehicle experiences a total loss. This condition can occur when a car is worth less than the outstanding bad credit auto loan balance.

GAP waiver coverage from your lender or lease company usually costs more than GAP insurance from your auto insurer. GAP waivers typically cover no more than 25% of your vehicle’s value. California law imposes the following rules on GAP waivers in connection with conditional sales contracts (CSCs):

• Itemization of the financed GAP cost
• A note that the GAP waiver is optional
• A disclosure that the holder of the CSC is the contracting party to the GAP waiver
• The name and mailing address of the seller (and the administrator, if any)
• The waiver must cover the entire gap amount
• The cost for the GAP waiver cannot exceed 4% of the loan amount car buyers finance under a CSC
• GAP waivers are prohibited when the financed loan amount exceeds the GAP amount, the waiver’s maximum loan-to-value (LTV) ratio (unless the consumer agrees), or is below 70% of the manufacturer’s suggested retail price (for a new vehicle), or average national price (for a used car).

Some experts believe the California GAP waiver law will serve as a template for a national law.

Bad credit auto loans are available for new cars, certified inventory, and used cars. Many lenders limit eligibility to vehicles less than 10 years old with no more than 100,000 miles on the odometer and a financed amount of at least $5,000.

Since a low credit score and troubled credit report may limit the amount you can borrow, you are more likely to qualify for a used bad credit car loan when you don’t have good credit. Despite a problematic credit report, you may be able to get a certified or new car if you make a large down payment or trade in a valuable vehicle. 

Unfortunately, some lenders resort to predatory practices that can cost borrowers hundreds or thousands of dollars. If you are looking for a bad credit car loan, avoid dealers that offer loans laden with junk add-ins (such as GAP waivers) or require disputes to undergo mandatory arbitration that bars you from your day in court.

You can detect predatory car loans by looking for unusually high fees and auto loan rates, loans available without credit checks, high-pressure tactics, bait-and-switch tactics, and negative amortization loans that increase your indebtedness over time. Avoid loans that include add-ons you don’t want or demand additional assets to secure your car loan.

Shoppers should be wary of buy here, pay here dealerships that charge an abusively high annual percentage rate and down payment on their auto loans. They also frequently cram in unnecessary junk fees. 

Several federal laws protect consumers against higher loan costs due to illegal discrimination. In addition, California has laws prohibiting predatory lending practices. 

For example, the state’s Penal Code 487 punishes predatory practices that cause more than $950 in damage (such as excess upfront fees) with 16 months in state prison and a fine of up to $10,000. Predators that work together can also trigger conspiracy charges.

A face-to-face visit can alleviate concerns and lead to faster resolutions. Here are some in-person options for bad credit auto loans in California:

Before you visit these businesses, you should do a little research on Google to ensure they have good reviews. Check their websites for any information about how they work with customers who have bad credit, and perhaps even browse their inventory.

Our review of California subprime car loans should clarify that you can rely on governmental protections against abusive or unfair practices. We believe our reviewed lenders are trustworthy.

Nevertheless, always read your car loan contracts carefully before signing. Once you have a car loan, do everything possible to make your payments on time, lest you risk an unpleasant visit from a repo agent.