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7 Best Car Loans for Bad Credit in 2024: Complete Guide & Reviews
Finding a car loan with bad credit can feel overwhelming, but it's not impossible. While you may face higher interest rates, several reputable lenders specialize in working with borrowers who have less-than-perfect credit. We've analyzed dozens of lenders to bring you the 7 best car loans for bad credit in 2024, complete with current rates, requirements, and expert insights.
Quick Summary of the Best Car Loans for Bad Credit
Before we dive into the details, here's a snapshot of our top picks:
- Best for Post-Bankruptcy: Prestige Financial
- Best for Multiple Offers: Autopay
- Best for Rate Discounts: Digital Federal Credit Union
- Best for One-Stop Shopping: Carvana
- Best for Prequalification: Capital One Auto Finance
- Best for Unemployed Borrowers: Credit Acceptance Corp.
- Best for Rate Shopping: MyAutoLoan
Understanding Bad Credit Car Loans in 2024
According to Experian's latest State of the Automotive Finance Market report, the average interest rates for bad credit car loans (credit scores below 600) range from 13.53% to 21.18% for used cars and 9.29% to 14.17% for new cars. While these rates are significantly higher than those offered to borrowers with good credit, having access to transportation often outweighs the extra cost.
Detailed Reviews of Each Lender
Prestige Financial: Best for Post-Bankruptcy Borrowers
Key Features:
- Accepts Chapter 7 and Chapter 13 bankruptcy cases
- Interest rate reduction program (up to 2% annually)
- Minimum income requirement: $2,250 individual/$2,750 joint
- Allows joint applications
- APR floor of 14%
Autopay: Best for Multiple Refinance Options
Key Features:
- Loan amounts: $2,500 to $100,000
- Terms: 24-96 months
- Multiple refinancing options available
- Soft credit pull for prequalification
- Access to multiple lender offers
Digital Federal Credit Union (DCU): Best for Rate Discounts
Key Features:
- 0.5% discount for eligible checking account members
- 0.25% discount for energy-efficient vehicles
- Same rates for new and used cars
- Financing up to 130% of vehicle value
- Terms up to 84 months available
- Membership required ($10 nonprofit donation qualifies)
Carvana: Best for One-Stop Shopping
Key Features:
- Minimum annual income requirement: $5,100
- 30-day prequalification offers
- Integrated car shopping platform
- No active bankruptcies allowed
- Co-signers accepted in select states
- Soft credit pull for initial approval
Capital One Auto Finance: Best for Prequalification
Key Features:
- Minimum monthly income: $1,500
- Minimum loan amount: $4,000
- Access to 12,000+ participating dealerships
- Auto Navigator tool for car shopping
- Available in 48 contiguous states
- New and used car loans available
Credit Acceptance Corp.: Best for Unemployed Borrowers
Key Features:
- Accepts unemployment income
- Available in all 50 states
- Considers open bankruptcies
- Works with buy-here, pay-here dealers
- New and used vehicle financing
- Indirect lending through dealerships
MyAutoLoan: Best for Rate Shopping
Key Features:
- Up to 4 loan offers within minutes
- Minimum FICO score: 600
- Minimum annual income: $21,600
- Multiple loan types available
- Interest rate calculator tool
- Considers discharged bankruptcies
How to Improve Your Chances of Approval
- Save for a Larger Down Payment
- Reduces the loan-to-value ratio
- Shows commitment to lenders
- Typically leads to better interest rates
- Consider a Co-signer
- Can significantly improve approval odds
- May help secure lower interest rates
- Must be someone with good credit
- Check and Improve Your Credit
- Review your credit reports for errors
- Make all current payments on time
- Reduce existing debt if possible
Smart Shopping Tips for Bad Credit Car Loans
- Get Prequalified First
- Understand your budget
- Compare multiple offers
- Avoid hard credit pulls until necessary
- Watch for Red Flags
- Extremely high APRs (above market averages)
- Pressure to decide quickly
- Hidden fees or unclear terms
- Required add-on products
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- Car insurance payments
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- Maintenance and repairs
- Auto parts and accessories
- Car washes and detailing
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Frequently Asked Questions
What credit score is needed for a car loan?
While some lenders require scores of 600 or higher, others specialize in bad credit loans and may approve scores as low as 500, though rates will be higher.
Can I get a car loan while in bankruptcy?
Yes, some lenders like Prestige Financial and Credit Acceptance Corp. specifically work with borrowers in bankruptcy, though terms may be less favorable.
How much should I put down on a car with bad credit?
Most experts recommend at least 20% down with bad credit, though some lenders may accept as little as 10%.
What's the highest interest rate I should accept?
While rates for bad credit can exceed 20%, try to stay under 18% APR by shopping around and improving your application with a larger down payment or co-signer.
Can I refinance a bad credit car loan?
Yes, many borrowers refinance after 6-12 months of on-time payments and credit improvement. Services like Autopay can help you compare refinancing options.
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Editorial Disclosure: Opinions expressed here are those of Kudos alone, not those of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.
