Bad Credit Car Loans

Having poor credit doesn’t necessarily mean that you won’t qualify for a car loan.  In fact, applying for a car loan from a trusted lender can have a positive impact on your credit score when you make full and timely payments.  You may have the option of getting a car loan from a dealership, but this is not recommended.

For one, car dealerships offer the best instant loans with higher rates of interest compared to other auto lenders.  Working with a dealership also does not guarantee that your credit information will be reported to the major credit bureaus.

So if your aim is to secure an auto loan and improve your credit score in the process, here is our list of the best auto loan lenders who are willing to work with borrowers who have no credit check loans scores.

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List of the best auto loan lenders and their requirements

We have done a deeper research on different car loan lenders in the country and selected the best ones based on the rates of interest they offer, minimum credit score requirements, customer reviews and vehicle purchase stipulation.

Auto Credit Express

To qualify for a car loan at auto credit express, you must be on full time employment and have a fixed monthly income of not less than $1500.  Even if you have a bankruptcy history, you can still quality for an auto loan from Auto Credit Express. You may be required to put a down payment of $500.

When it comes to auto loan lenders for bad credit repair, Auto Credit Express is one of the leading providers. The lender has managed to get the best customer reviews. The only disadvantage is that the company does not approve auto loans which go through private sellers.

To get the funding, buyers are first required to go through a dealership and choose the vehicle they want before applying for the short term loans.  The lender matches borrowers with a local dealership in order to find a car that suits their needs and budget.

The loan application process can take as little as three minutes. You will have to spend some time on the phone to speaker with a loan agent who can assist you in finding the best deals around.

Capital One

An auto loan from Capital One can be a good option for car shoppers who earn a monthly income of between $1500 and $1800.  Your credit score will also determine the loan amount. Other requirements include:

 

  •       The purchased vehicle must be a 2009 or later model
  •       The vehicle should not have more than 120,000 miles

 

Your existing Capital One account (if you have one) must be in good standing.

One main disadvantage of applying for a Capital One bad credit auto loan is that the online pre approval process can be misleading.  While it is possible to get preapproved for a certain loan amount, it still isn’t a guarantee that you will get approved for the loan.  You may have to go through the preapproval and even complete the car searching process, only to be notified that you do not qualify for the auto loan. 

This may be one of the reasons why Capital one has a poor satisfaction rating, which stands at two stars out of five from review by 170 customers in 2019.

Lending Club

 Lending club is known to offer personal loans for bad credit, but it also provides auto loans refinancing. The main reason why people refinance their auto loans is to benefit from the longer loan terms and lower monthly payments.  To be eligible for refinancing, your vehicle should not be more than ten years old and have less than 120 000 miles.

The vehicle should also be for personal use. It therefore means that employer or business vehicles will not quality for refinancing.  Your original car loan should not be less than a month old and should have an outstanding balance between $5,000 and $55,000 with remaining repayment period of at least 24 months.

What’s important to note is that the rate of interest may increase, so you should take time to read through the terms and conditions before committing to the loan.  You can get the application feedback within an hour after submitting your form.

If approved, it can take up to 7 days for the loan to be funded. If you apply for the loan with a cosigner, you can stand a better chance of getting approved and even qualify for a lower interest on the loan.

Lending Club has a customer satisfaction rating of 3.5 out of 5 stars, making them a good option to consider when it comes to refinancing an auto loan.

Carfinance.com

 To qualify for an auto loan with carfinance.com, you should have a credit score of at least 500. Your prospective vehicle should also 2011 or newer model with less than 14000 miles.

 Once you get approved for the loan, the lender will provide a funding certificate which will be used as cash at the car dealership. Carfinance.com also offers auto loan refinancing for borrowers with poor credit repair.  One advantage of working with the lender is that you can get the application feedback, as well as the loan terms and conditions in as little as 30 minutes during business days.

 If your intention is to buy a truck, ensure that you first credit check loans the makes and models that are ineligible for funding by the lender.  Only light duty trucks that are used for personal activities are funded by carfinance.com. The lender does not charge an application fee. Carfinance.com has a one star rating with the Better Business Bureau.

 Carvana

 Unlike other lenders, Carvana allows borrowers to prequalify for a vehicle even before they begin the car searching process.  This helps save time. The terms and conditions are also valid for up to 45 days, which gives buyers enough time to shop around. Only a soft credit check is performed during the preapproval process and this won’t have an impact on your credit score.

 The lender does not have minimum credit score requirements. You however should not have a history of bankruptcy on your credit report. You should earn an annual income of at least $10,000 to quality for the loan.  The amount to put as down payment will depend on the vehicle you want to purchase, the loan term and your credit score.

The lender provides ways that can help you meet the requirements. This information is available on their website. Among them is the possibility of trading in your current vehicle.

 When you get pre-approved for the loan, you won’t be allowed to purchase the car outside Carvana.  But if you want to finance through a third party (like banks or credit union), the loan from this institution can be combined with the amount approved through Carvana. 

 

The lender has an A+ rating with the Better Business Bureau.

 Comparing our top picks for bad credit auto loans

 

APRLoan TermMinimum LoanMaximum Loan
Capital One3.24%Varies$4,000$40,000
Lending Club3.95% to 35.89%36 months$5,000$55,000
CarFinance.com7.99% to 21.99%Up to 72 months$7,500$50,000
CarvanaBased on credit history36 to 72 months$7,600$85,000
Auto Credit ExpressVariesVariesNone$35,000

 

Explore your options
Explore your options

What qualifies some car loans as bad credit auto loans?

 Basically, fico score is a numerical representation of your bad credit car loans.  This score lies between 300(lowest fico score) and 850(highest fico score). With a higher fico score, you will stand a better chance of qualifying for auto loans with affordable rates. On the other hand, poor or low credit score, which is usually lower than 500 will reduce your chances of getting approved for affordable loans.

 There are several factors that contribute to individual fico scores. These include your payment history, debt relief to income ratio, number of new account inquiries and the age of your existing credit accounts. Your payment history, which is the main contributing factor, involves your ability to make full and timely loan repayments.

 If you have a poor credit score, most lenders will consider you as a high risk borrower. When you apply for a loan with a traditional bank or credit unions, you may need a form of collateral to get approved.  So if your need to purchase a car is not urgent, it is important to take steps that can improve your credit score before securing an auto loan.

 When you have a low credit score, there are personal bad credit loans available for non-vehicle financing.

 The bottom line

 Based on a study done in 2014 by the Federal Reserve, 40% of the surveyed individuals shied away from applying for some form of credit due to the fear of getting rejected.  For most people, a personal vehicle is a necessity that can help you move around with ease. If you have bad credit payday loans, what you need to know is that the situation is never permanent.  There are different ways you can use to secure a loan for your vehicle. And just like any other loan, do not forget to go through the terms and conditions before signing the dotted lines.

Ensure that you are getting into a contract that you can commit to.  Thanks to the wide range of options available, it is now easier to find a vehicle that you can rely on based on your credit history.