Bad Credit Auto Loans Online in 2022

Bad Credit Auto Loans Online

I’ll make sure my nephew reads this article about the best bad credit auto loans online. His credit is lousy, and he has a nasty habit of wrecking vehicles. Even he should be able to arrange financing on his next truck from one of these lenders. 

I’m sure, dear reader, that you are a better driver, but if your credit is far from good, check out these lenders before shopping for your next car. 

Top-Recommended Bad Credit Auto Loans

These three companies work with national car dealer networks that arrange bad credit financing to the credit-challenged. They facilitate tens of thousands of online loans each year, putting drivers with poor credit into their next vehicles quickly and efficiently. 

  • 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
  • Click here for 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

Auto Credit Express is a network of lenders rather than a direct lender. The loans it arranges generally top out at an interest rate of 29.99%, but you may find lower quotes, depending on your credit score. You can use the website to prequalify for a bad credit auto loan and get an estimate of your monthly payments for a given loan term. 

  • Free, no-obligation application
  • Specializes in auto loans for bankruptcy, bad credit, first-time buyer, and subprime
  • Affordable payments and no application fees
  • Same-day approval available
  • Connects 1000’s of car buyers a day with auto financing
  • Click here for application, terms, and details.
★★★★★

4.5

Overall Rating

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

The Car.Loan.Com network has arranged more than $1 billion in bad credit financing for consumers with poor credit. The available bad credit auto loan rates vary by auto lender and your credit score. The network welcomes consumers with any financial history, no matter how challenged. 

★★★★

4.0

Overall Rating

Interest Rate In Business Since Application Length Reputation Score
Varies 2003 2 minutes 7.5/10

The myAutoloan.com lending network works with credit scores as low as 550. To prequalify, you must be a U.S. citizen, 18 or older, and have an income of at least $2,000/month. You can apply for a new or used car loan and receive up to four bad credit car loan offers in minutes.

Other Bad Credit Auto Loans to Consider

These four companies are a mix of direct and network lenders. They are all well-known, reputable companies that work with all credit levels. 

4. Carvana

Carvana is a direct seller and lender with a dealer network that extends throughout North America. The company offers to finance vehicles regardless of credit history. You can prequalify in a few minutes without harming your credit score, although the dealer will perform a hard credit check before finalizing your loan.

5. DriveTime

DriveTime works directly with a sales advisor to structure your loan. State usury laws determine the maximum loan rate the company can charge. DriveTime says it offers guaranteed credit approval to all applicants, but some loans will apply only to used cars and have heavily restricted terms. In other words, guaranteed credit approval may be of dubious value.

6. LendingTree Auto Loan

The LendingTree network can send you up to five bad credit car loan offers within minutes, each with a unique set of terms. You can accept an offer and complete the application process on the same day. In fact, you may be able to own a new car within 24 hours of submitting your finance application form.

7. LightStream

LightStream, a division of Truist Bank, offers an uncomplicated loan process. It advertises an interest rate range from 2.49% to 19.99% with AutoPay. To get a vehicle loan from LightStream, you must have an established credit history and a solid monthly payment record with few delinquencies.

8. Capital One Auto Finance

Capital One Auto Finance is one of the largest vehicle lenders in America. It is part of Capital One Bank, the major credit card issuer. You can receive quick preapproval at the Capital One website and receive a prequalification certificate that you’ll present to the car dealership. You may receive price alert emails from Capital One Auto Finance to help you select a vehicle.

How Can I Get Approved For a Car Loan With Bad Credit?

The reviewed auto loan networks share similar procedures for arranging car loans. You begin by filling out a loan request form, from which the networks generate offers from interested dealers near you. 

You can then complete an online finance application for a specific loan amount and receive a quick response. The auto loan networks do not charge you for finding dealers willing to work with you and instead receive finder’s fees from the dealerships.

The deal you work out will depend on several factors. You can get a sweeter deal by making a sizeable down payment or applying with a cosigner.

Ultimately, improving your credit score is the easiest way to access a large loan amount and better loan terms, which may qualify you for a vehicle from the dealer’s certified pre-owned inventory. 

How to Get Better Auto Loan Terms

Many auto lenders that serve subprime consumers are buy here, pay here (BHPH) dealerships that finance car loans internally, without involving banks, credit unions, or other commercial lenders. These dealerships may be able to offer you loans without requiring a down payment because they have total control over their lending decisions. 

If you sign up for them, you’ll receive price alert emails when additional pre-owned vehicles arrive at the car dealership.

BHPH dealerships have more latitude to offer special financing than do manufacturer dealers. For example, if you like Honda cars, be aware that the manufacturer sets the auto financing policy and designates new Honda specials. You may have to settle for service coupons at some dealerships instead of an affordable deal.

Can I Get a Car With a 500 Credit Score?

In reality, any credit score will do when you look for an auto loan. The dealer networks and buy here, pay here dealerships vie for your business and can be pretty flexible when working out a financial arrangement, despite your previous credit problems. 

Enabling this relaxed attitude is the fact that the lender can repossess the car if you fail to make the payments. Thus, these lenders have little to lose by providing loans to buyers with bad credit.

This is not to say that anything goes, and lenders may apply various requirements to screen out some borrowers. For example, Auto Credit Express identifies the following criteria for subprime car loans:

  • A single monthly income source of $1,500 to $2,000 pre-tax, accompanied by a recent pay stub
  • At least three years of employment history and six months on a current qualifying job
  • A recent utility bill to serve as proof of residence
  • A recent phone bill for a landline or contract cellphone from a national carrier
  • Six to eight personal references, including names, addresses, and phone numbers

Bad credit may limit you to older, high-mileage vehicles. Some dealers may insist on a down payment, even if only a small amount. The dealer may weave other unique features into the loan agreement, such as biweekly payments, automatic payments from the buyer’s bank account, and in-person payments. 

If you’d like more freedom of choice, you have two primary alternatives before applying for an auto loan:

  • Recruit a cosigner: Cosigners tremendously reduce a dealer’s risk exposure. By using a cosigner with good credit, you’ll be able to shop for just about any vehicle on the dealer’s lot, within reason. Both you and the cosigner are responsible for the monthly payments, and both of you will suffer harm to your credit scores if you miss payments. 
  • Improve your credit score: Moving your score from bad to fair or better will significantly improve the dealer’s loan terms. You can rebuild credit by always paying your bills on time and keeping your debt balances low.

Ideally, you’d like to get your score into good credit territory, which in the FICO scoring system is 670 or higher. It can take well over a year, and sometimes much longer, to reach this goal, but it’s a goal worth achieving. 

Average Auto Loan Interest Rates

In the meantime, it’s reassuring to know that auto loans are available today, even when your credit score is poor. 

What Happens When My Auto Loan Is Approved?

If you accept a bad credit auto financing offer, you can visit the dealership to select a car. You may have to travel on unfamiliar roads, so ensure you have the correct driving directions. 

Some lenders may issue you a prequalification certificate that you’ll present to the dealer when you visit. Though you may find a car among the new inventory, it’s far more likely you’ll be choosing a vehicle from pre-owned inventory and not among the new cars available.

In general, pre-owned inventory is less expensive than new inventory. But the dealer may have closeouts and new vehicle specials that compete with pre-owned vehicles. Certified pre-owned vehicles are usually the most expensive, and you may save the most money by concentrating on pre-owned specials. 

Among the pre-owned specials, you’re likely to find high mileage cars with scratches and dents that won’t affect the car’s performance. Car specials provide a great way to save money.

At the other extreme, low-mileage certified pre-owned vehicles are typically in pristine condition and come with a manufacturer’s warranty. It’s difficult to get a loan for certified pre-owned inventory when using bad credit auto financing.

If you find a vehicle you want, you’ll sign the final papers, turn in your used car (if applicable), and drive off in your next vehicle. You may have to visit the lease return center if your old car is on lease. Most dealerships have a lease return center manager who can tell you if you have any equity in the leased car (i.e., the automobile is worth more than its original residual value). 

Typically, the car dealer will pull your credit before committing to the loan terms. A hard inquiry will reduce your credit score from one to eight points for a year and remain on your credit report for two years. 

What Credit Score Do Car Dealerships Use?

FICO is the dominant credit scoring system in North America, so it isn’t surprising that nearly all car dealers use it. You may not know that FICO has created unique scoring systems specifically for auto financing. 

The systems, the FICO Auto Scores, adapt the standard FICO score to give dealers a better understanding of whether you’re likely to meet the regular monthly payment schedule on your auto loan.

Two popular versions are FICO Auto Score 8 and Auto Score 9. They use a scoring range from 250 to 900 instead of the 300 to 850 range on the regular FICO system. Your Auto Score starts with your standard FICO score but assigns more weight to the timeliness of your payments on previous auto loans.

Types of FICO Credit Scores

The Auto Scores do not delineate the different credit grades, so it’s up to each dealership to interpret your score and respond accordingly. You can buy access to all your FICO scores by paying the company a fee.

Compare The Best Bad Credit Auto Loans Online

The providers of the best bad credit auto loans online share a determination to get as many people into vehicles as possible. Only by arranging loans and selling cars do car dealers stay in business. Running a fancy service center with a menu of service specials won’t pay the bills. 

Car lenders will bend backward to accommodate almost anyone with a sincere desire to treat their finances responsibly, despite their previous credit problems. If you need a car and your credit score is in the ditch, the lenders in this review are a valuable resource to potentially get you behind the wheel of your next drive. 

Remember, today’s cars are exceptionally well-made (for example, check out the reliability records of Toyota and Honda cars) and can easily run for 200,000 miles or more. So take heart – a suitable vehicle and an affordable deal may be just down the road. 

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