Written by: Eric Bank
Edited by: Lillian Guevara-Castro
Reviewed by: Ashley Fricker
If you think it’s unlikely to find nearby car dealers that accept bad credit, think again. Poor credit need not consign you to a clunker, thanks to the car dealerships and networks that gladly serve consumers with any type of credit. These dealers can risk a bad credit car loan to a car buyer with a bad credit score because the financed cars serve as collateral — if a car buyer defaults on payments, the car can be repossessed.
Given the many choices, a little comparison shopping can help you identify the best deals available for your credit situation. That makes it easy for you to find a bad credit auto loan for a new or used vehicle with affordable payments and a reasonable interest rate.
Networks Connecting You to Car Dealers That Accept Bad Credit
The following networks can match you to a bad credit car dealer willing to work with you to finance a car. There’s no charge for this service, and you’re never under any obligation to agree to a loan. Applying for a bad credit car loan couldn’t be easier — you need not leave the comfort of your home to arrange the transaction.
If things go smoothly, you could have a new car in your driveway before the day ends.
- 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.
| Interest Rate | In Business Since | Application Length | Reputation Score |
|---|---|---|---|
| 3.99% - 29.99% | 1999 | 3 minutes | 9.5/10 |
Auto Credit Express works with a network of dealers throughout the country that can help you find the car you want and the deal you can afford, even if you have less than good credit. It takes only a minute to complete the short loan request form that Auto Credit Express uses to qualify you for a loan. You’ll then be contacted by a nearby bad credit car dealer that can complete your financed purchase as quickly as later in the same day.
2. LendingTree
- 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.
| Interest Rate | In Business Since | Application Length | Reputation Score |
|---|---|---|---|
| Varies | 1998 | 4 minutes | 9.5/10 |
LendingTree is one of the larger loan networks, with nationwide options for all types of car loans. Its service is rated Excellent on Trustpilot, and you can compare up to five loan offers in three easy steps.
- 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.
| Interest Rate | In Business Since | Application Length | Reputation Score |
|---|---|---|---|
| Varies | 2003 | 2 minutes | 8.5/10 |
The myAutoloan.com network can handle loans for new and used vehicles, cash-out refinancing, and other financing options. This auto lender matching service can provide you with up to four loan offers in just a few minutes. You can then evaluate the details of each offer before deciding which one to pursue.
- 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.
| Interest Rate | In Business Since | Application Length | Reputation Score |
|---|---|---|---|
| Varies | 1994 | 3 minutes | 9.0/10 |
Car.Loan.com Auto Loans works with the nation’s largest network of auto dealers that specializes in bad credit financing of cars for consumers with less than good credit. It will take you only a few minutes to complete the loan request form and prequalify for a subprime auto loan. The network is known for speedy action, so don’t be surprised if you hear back from a direct subprime lender within minutes of prequalification.
Dealers That Accept Bad Credit Applicants
Bad credit is OK with the following dealers, as they all have long experience working with subprime borrowers. These dealerships are located nationwide for you to shop online or visit and choose your next vehicle. You can prequalify on their websites before visiting the lot.
5. Carvana
Carvana is a pioneer in no-contact car sales in which you can select a vehicle and arrange auto financing online, and then accept the car delivered directly to your home. Carvana provides bad credit financing on its own but permits you to use an external lender if you prefer.
It can take as little as 10 minutes to wrap up the loan process and schedule vehicle delivery.
6. DriveTime
With more than 130 dealerships nationwide, DriveTime can provide you with a loan despite your poor credit score. It boasts a track record of 4 million vehicle loans since its founding, during which time DriveTime perfected the process of speedy approval for most applicants.
The loan offer you receive will specify an initial down payment and subsequent monthly payment installments that you can afford for a car priced to fit your budget.
7. CarMax
Well-known for its TV commercials, the CarMax network of almost 200 nationwide dealers routinely accepts loan applications from drivers with poor or limited credit. You can finance your car with CarMax or choose an outside lender.
However you proceed, CarMax can sell you a car or refinance your current vehicle, whatever your credit profile.
FAQs: Do Car Dealerships Approve Bad Credit?
The business model of a bad credit car dealership is usually predicated on selling vehicles to consumers with below-average credit. They are able to do so because vehicles serve as collateral for their own bad credit auto financing.
If you can’t afford to make the payments, the car dealer will repossess the car and sell it to someone else. Contrast this to the plight of personal loan providers, who may collect only a small amount of the borrowed sum if you default on the loan.
The lien they have on a car’s title permits lenders to repossess vehicles for non-payment, reducing an element of risk that would otherwise discourage the lending process. The car dealerships and lending networks featured in this review have the experience to decide bad credit auto financing transactions for lenders of every stripe.
If you use Auto Credit Express, LendingTree, Car.Loan.com, or MyAutoloan.com, you’ll have a network of lenders at your disposal that will work quickly to get you the deal you need.
How Do I Find a Reputable Dealership When I Have Bad Credit?
When you have bad credit, you should take precautions to ensure a car dealership isn’t taking advantage of you because of your financial situation. Research dealerships before you visit to ensure they have experience working with consumers who have bad credit. Also, be sure to read reviews from their customers on other platforms, including Google, to get a sense of the dealership’s overall reputation.
Here are some other red flags to watch for during your search:
- High-pressure sales tactics: Reputable dealerships won’t pressure you to make quick decisions without having time to review all of the financial terms and details.
- Lack of Transparency: The company should be upfront with costs, terms, interest rates, and any fees it may charge. If s dealer is reluctant to divulge this information, beware.
- Fees for financing: You should avoid any dealership that requires you to pay a fee to apply for financing. Legitimate auto dealerships do not require such fees.
- Condition and value of cars: Look around the lot or the dealer’s online inventory. Less-reputable dealers may have older, high-mileage cars listed at inflated prices to take advantage of consumers with bad credit.
- Changing terms: As you get closer to making a deal, be sure to read the terms, conditions, and rates carefully. If they are different from what you discussed before, that is a sign you may be dealing with a shady company.
You should also be cautious when dealing with buy here, pay here auto dealerships. These dealers finance loans in-house, meaning they can extend financing offers to anyone, including those with credit issues. They may check your employment history and income to ensure you can make payments and the interest rates are typically astronomical.
If you go through a buy here, pay here dealership, be sure to understand their payment arrangement and repossession policies. These dealers can be aggressive with repossession and may even take your car back for a single missed payment. Some even install GPS tracking devices and remote shut-off switches that allow them to track and disable the vehicle if you don’t pay the loan.
What Info is Needed to Fill Out an Auto Loan Application?
You will be asked to provide information, including your name, address, Social Security number, employment and income data, existing debts, and other financial data. When you go through a car dealer network, the prequalification step uses a subset of this information combined with data gleaned from a soft pull of your credit history from one or more credit bureaus.
After you prequalify, the dealer will submit a hard inquiry and collect additional information before completing the offer. Beyond your bad credit score, a lender’s finance department typically looks at past defaults, write-offs (including those from a bank or credit union), collections, repossessions, and bankruptcies. These need not be fatal, especially on secured loans like those for automobiles.
Which Credit Score Do Car Dealerships Use?
It’s always a good idea to check your credit score before applying for a loan. Knowing your score in advance will help you anticipate how much you’ll be allowed to borrow and the terms of the loan, including interest rate, loan term, and monthly payment amount.
Automobile-oriented scoring systems pay special attention to data that may impact a dealer’s loan decisions, such as:
- Car-related bankruptcies
- A thin or short credit history
- Late automobile payments
- Repossession and collection activity related to car loans
- Lack of different credit types used
Auto dealers can choose among several credit scoring systems when underwriting a loan, including:
- FICO Auto Score: There are several versions of this score, including Versions 2, 4, 5, 8, and 9. All have a range of 250 to 900, and Version 9 is used by all three credit bureaus.
- TransUnion CreditVision: Tailored to the prime and subprime auto loan marketplace with trended data going back as far as 30 months. FICO Auto Score 9 XT utilizes the CreditVision trended data.
Other scoring systems may be used by certain car dealership organizations, as new systems are frequently released in an attempt to provide the most relevant, actionable information for an auto lender’s finance department.
How Can I Improve My Auto Loan Terms?
In the car buying process, one of the easiest ways to get better terms on your subprime car loan is to recruit a cosigner with stellar credit who will be responsible for any payments you miss. The loan term specifics should be based on the cosigner’s credit score.
In addition, it’s helpful to provide equity for your vehicle loan through a down payment or trade-in. By contributing equity, you have more “skin in the game,” meaning the possible forfeiture of your equity should motivate you to keep up with payments.
You can also take steps to improve your credit score to land better loan terms. This means paying all your bills on time, keeping your debt-to-income ratio below 28%, and cleaning up your credit report, either by yourself or with the help of a credit repair agency.
As the following chart shows, your credit score can greatly impact the interest rate on your auto loan:
Whether you buy a used or new car, a better credit score means a better interest rate.
Get Back on the Road with the Right Lender
Hundreds of car dealers throughout the United States accept bad credit. We’ve reviewed three direct lenders and three lending networks that each offer multiple types of loans. All this goes to show that bad credit need not prevent you from getting a new or used car.
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