Subprime Auto Loans

Subprime Auto Loan Providers

Subprime auto loans are positioned to help many workers who will be heading back to the office after working from home for the past few years. About half of business leaders say their company already requires, or plans to require, full-time in-person work in the year ahead.

Workers who ditched the car in 2020 will need to find a way to commute to work. Subprime auto loans are a great way to finance a new car for those with bad credit. A poor credit score is usually an inhibitor for people who want to buy a new car, but the right subprime car loan can put you in a car on terms that work for you.

Top Recommended Subprime Auto Loans 

These auto loan networks rated at the top of our metrics for their approval time, bad credit financing, and the interest rate they offered. Each network partners with national car dealers, banks, and other direct lenders to facilitate thousands of online loans to get drivers with bad credit financing for a new car ASAP.

  • 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 matches you with preapproved loan options from nearby dealerships and nationwide lenders. A borrower with bad credit will see subprime loan options that top out at a 29.99% interest rate from the largest network of car buying and financing resources in North America. Auto Credit Express specializes in helping first-time buyers, people with various credit history issues such as a delinquency or repossession, and people with past bankruptcy discharges.

  • 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

Car.Loan.com regards itself as the nation’s leading online car buying center for people with special circumstances. People with bad credit can find a subprime auto loan for a new or used car the same day they submit the application. Car.Loan.com’s dealer partners have closed more than $1 billion specifically for people who need a subprime car loan or needed an auto loan following a bankruptcy.

★★★★

4.0

Overall Rating

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

MyAutoloan.com’s presents borrowers with up to four car loan offers in just minutes after they complete an application, no matter their credit scores. The car loan dealer network has an auto payment calculator right on its website that shows a subprime borrower exactly what their monthly payment and interest rate could be. Borrowers are in the driver’s seat when looking for an auto loan, with MyAutoloan.com providing all of the subprime credit loan resources needed.

Reputable Subprime Auto Dealers

These three auto dealers help buyers find the car they want at an attractive price. The dealers set up buyers with a lender that works with people of all credit types, including those with subprime credit scores.

4. CarMax

CarMax Logo

CarMax has its own auto financing division, but also offers financing options from multiple partners. Its subprime credit financing process is no-pressure and hassle-free. No matter which lender a car buyer goes with, the car’s price stays the same. CarMax even lets buyers shop around for a better interest rate or monthly payment for three days after taking the car off the lot to ensure they get the best deal.

5. Carvana

Carvana Logo

Carvana allows anyone with a bad credit history to finance a car through its websites with only a few conditions. Buyers need to be 18 years old or older, make at least $4,000 a year, and have no bankruptcies. Filling out the application does not affect your credit score. Prequalifying with a Carvana loan allows borrowers to browse the dealer’s inventory on terms the buyer is comfortable with.

6. DriveTime

DriveTime offers financing for all credit types and histories. The car dealer has options for people with poor credit, or those with a bankruptcy on record, or a high delinquency rate. But buyers with a bad credit history may have to buy a used car with heavily restricted terms and a higher interest rate.

What Is a Subprime Auto Loan?

A subprime auto loan is a type of loan lenders offer to buyers with low credit scores and poor credit histories. These loans are for people with credit scores below  600. 

Subprime loans have a higher interest rate because borrowers who need them are most likely to default on the loans. Subprime auto loan interest rates are usually at least triple the prime loan rate.

How Do I Apply For An Auto Loan With Bad Credit?

Applying for an auto loan with a low credit score is like applying for any other auto loan. The terms, however, will be far different from those lenders offer for a prime loan. 

The first step is to look for an auto loan network that does most of the hard work for you by sending your information to a local or national car dealer. Filling out their applications will usually yield results the same day.

Applications to the networks only take a few minutes to complete. You need proof of residence, proof of income, and your Social Security number. A bill or your driver’s license will serve as proof of residence, while proof of income can come from pay stubs from your employer.

Shop around and look for the subprime loan term that best suits you. Getting a qualified cosigner with better credit to sign up with you can help. But because of the risk involved, many people refuse to be a cosigner.

How to Get Better Auto Loan Terms

Dealer networks like the ones listed above do not charge for their services. You can sweeten the deal and get better financing options on subprime loans by providing a down payment or a trade-in which will improve your loan-to-value ratio.

What Credit Score Is Considered Subprime?

Subprime credit scores are between 501 – 600, according to Experian. Credit scores below that range, however, will have more restrictive terms and higher interest rates.

Looking at your credit score and finding a way to boost it in the short term could be beneficial when you’re in the market for a new car. Lenders will look at borrowers with a higher credit score more favorably and will offer them better interest rates than they would a subprime borrower.

What Is the Average Subprime Auto Loan Rate?

Buying a new car or a used car will change the interest rate subprime borrowers receive. The average annual percentage rate for subprime borrowers on a new car is 10.87% as of June 2022. The average interest rate for a used car jumps to 17.29%.

Average Auto Loan Interest Rates for Q1 2022

The annual percentage rate of a loan changes based on the type of car a buyer wants. A dealer may not be willing to offer a new car to someone with a subprime credit score but can make a deal for an older car with more mileage that’s been sitting on the lot.

What Do Subprime Lenders Look For?

Your credit score predicts the likelihood of you defaulting on a loan or credit card payment within the next two years. More subprime borrowers are missing loan payments across the U.S., so subprime lenders must consider other factors when determining whether to offer a preapproved loan. 

The ability to repay the loan and having an income that can support repayment of the loan is generally more important than your credit score.

An auto lender will look at your employment history and most importantly, your income. Your debt to income ratio also plays a role in your financing options. 

Subprime Car Loan DTI Example

Lenders will determine whether you can manage the loan based on how much you make and weigh it against other debt obligations you must pay each month, including credit card debt, a mortgage, or a student loan. Lenders want to see that you can comfortably make payments throughout the loan term without overextending your finances

Apply For Subprime Auto Loans Online

Applying for a subprime auto loan is not a scary thing to do. In fact, the ability to buy a car is liberating for most people, giving them the freedom to go wherever they want whenever they want. A subprime lender is more likely to work with buyers who really want a car and are committed to buying one and making the payments.

Cars today are built to last. Most cars built within the past 10 years can go 200,000 miles or more with just regular maintenance. Dealers will cut a good deal for anyone, whether they have a subprime credit score or not, to get a car off their lots. 

Getting an affordable car at a reasonable interest rate is possible with some research and just a little shopping around.

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