3 Top Providers of Bad Credit Used-Car Loans

3 Top Providers of Bad Credit Used-Car Loans
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Adam West
By: Adam West
Updated: September 4, 2018
BadCredit.org's popular "How-To" series is for those who seek to improve, rebuild or better understand their subprime credit rating.

Although many people are reluctant to give up on a good car, there are some sure-fire signs it’s time for a change. You know, like when your local tow truck drivers know you by name, or your mechanic sends you a gift basket for single-handedly funding his new pool.

But what if you don’t have the cash and your credit is in worse shape than your car? Fear not, because there are lenders out there who recognize your plight, and they will work with you to get a used-car loan even with your bad credit.

Subprime lenders specialize in bad credit auto loans, so they have less-stringent credit requirements than other lenders. However, be prepared to pay a little more in interest for that flexibility and understanding.

Providers | Tips for Finding a Loan

Best Auto Loan Providers for Bad Credit

While there are many lenders who specialize in loans for people with less-than-stellar credit, not all are alike. Online lending networks can be the easiest way to compare rates, as they help borrowers connect with lenders from around the country.

Many lending networks can have dozens of partners, so filling out a single application with an online network can result in dozens of lenders competing for your business. The lender networks we’ve reviewed specialize in finding bad credit auto loans from among an array of lending institutions out there.

  • 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 advertises that it has the largest database of lenders in the US. It has a network of dealer partners that specialize in loans for bad credit, no credit, bankruptcy, and repossession.

Established in 1999, this online lender network can qualify you in just 30 seconds, before you actually apply for a loan. That way, you know your approval amount before you spend the time filling out the application.

This network of lenders has closed in excess of $1 billion in bad credit auto loans, and can offer loans even to those with very low scores. Minimum income requirements may apply to individuals with bad credit, and interest rates can range from very competitive to quite high.

Car.Loan.Com specializes in auto loans for all types of credit, including first-time buyers, those with bad credit, and even people who have had a bankruptcy. This network works with individuals looking to lease, buy, or even rent a vehicle. It also offers loans for new or used cars and trucks.

In business since 1994, Car.Loan.Com has no application fees, and same-day approval of auto loans is available. Qualified borrowers can find affordable payment options, and there’s no obligation or commitment when filling out the easy online application.

MyAutoloan.com is another lender network with national reach. This network has lenders that offer loans for new and used vehicles, plus refinancing for qualifying vehicles.

This lender network has some of the lowest available rates, although credit scores have to be pretty good to receive the best APR. MyAutoloan.com has been in business since 2003. The application process is secure and confidential, and there is no obligation to accept any of the loan offers.

If the idea of shopping around for individual lenders and filling out multiple applications has no appeal for you, then an online lending network may be a good solution.

Keep in mind, however, that there’s no guarantee of you being offered a loan, or that the loan will have terms you can live with. The truth is that subprime loans can be tricky, and it pays to look very closely at the details of every loan offer you receive.

Tips for Finding a Used-Auto Loan with Bad Credit

Shopping for a car loan when you have bad credit can feel a lot like asking for a burger at a vegan convention — even if you get what you ask for, you’re sure it’s going to have a major catch.

However, you can improve your chances of obtaining a decent used-car loan by following a couple of guidelines. Here are some tips that may help you get the loan you want — or, at least, help you know what to expect from the loan offers you receive.

Check Your Credit Scores

Knowing your credit score ahead of time can be a big advantage when you begin looking for a loan. It can help you know where you stand so you have a better idea of what loan offers and rates will be available to you.

Looking at the reasons behind your low credit scores can also be a big help. There are also things you can do to improve your score, especially if you start long before you’re ready to apply for that loan.

First, get a copy of your credit reports — you have three, one each from Equifax, Experian, and TransUnion — and review them carefully, keeping an eye out for mistakes. Dispute any entries that are inaccurate by filing an online dispute with the credit reporting agency.

FICO Score Factors

Next, take a look at each of your accounts to see which may be dragging down your score. While there’s often little you can do about legitimate late payments or defaults — other than wait for them to age off of your reports — you can often improve other aspects of your score in a relatively short period of time.

For example, check any credit cards you have for over-utilization, i.e. any cards that are carrying balances that are more than a third of their limit. Pay down as much of this debt as you can, since credit utilization counts toward as much as 30% of your overall score.

Another important tip is to avoid opening any new credit lines before applying for a loan. Not only will new accounts lower your average account age — which contributes to 15% of your score, along with your overall credit history length — but the resulting hard inquiries can negatively impact your new credit factor, worth 10% of your score.

Provide a Down Payment or Trade-In Vehicle

When applying for a loan, the amount you’re requesting is one of the primary factors a lender looks at, and the better your credit, the more they’ll likely be willing to lend. If you have a low credit score, however, lenders may balk at your request for a big loan.

Since lenders like to see that you have “skin in the game,” you can typically make a down-payment or offer a trade-in vehicle toward the purchase. This both lowers the amount you’re asking for, and shows you’re serious about paying for your purchase.

Providing a down payment may also help cover the cost of the taxes and fees, which a lender is unlikely to want to give you. Additionally, in many cases, the bigger the down payment, the better the terms you’ll be offered and the lower your monthly payment will be.

If you have a vehicle to trade in, here’s something to consider. Dealerships will rarely give you what your vehicle is worth. The truth is they don’t really want an old clunker, and it’s more work for them to get rid of it. Instead, try selling your car to a private party where you’ll likely get a better value.

Apply with a Qualified Cosigner

If all else fails and you’re unable to qualify for a loan on your own, you can consider asking a friend or family member with good credit to cosign your loan. A qualified cosigner can help you get approved, but remember that this solution has its own set of risks.

First, a cosigner for a loan is on the hook if you fail to make the loan payments. So, if you miss a payment, it’s your cosigner who will most likely get the angry phone calls (though you may get a few from your cosigner).

Graphic of Pros and Cons of Cosigning

But that’s not all. Cosigned loans will show up on the credit reports of both the primary borrower and the cosigner. This means any poor credit behaviors, like delinquent payments or default, will impact not just your credit, but the credit of the person who trusted you.

Given that your cosigner is likely to be a friend or family member, this can lead to serious complications. Be sure you’re ready for the responsibility before taking on a loan, and particularly before asking someone to cosign a loan.

Your Credit Doesn’t Have to Keep You Off the Road

While it’s certainly great to be friendly with your favorite mechanic, being on his Christmas card list thanks to your junker breaking down every week isn’t the ideal way to go about it.

Thankfully, having a low credit score doesn’t necessarily mean you need to go on driving that old broken-down clunker. Having a reliable vehicle that won’t leave you stranded is a high priority for most people — and downright vital for many more.

By shopping around, perhaps through online lending networks, you may find a lender who is willing to take a chance on you, even with your bad credit. Just keep in mind that there are many different types of bad credit loans out there, so proceed with caution.