How To Get a Car Loan With Bad Credit

Buying a car can be stressful. Trying to get a car loan with bad credit can be even more stressful.

However, having a low credit score doesn’t mean you can’t qualify for a car loan. It just means you may need to put in some extra effort to find the right lender and loan for your financial needs.

Really, it all comes down to research. Before you get started, learn about where you can find a car loan with bad credit, and the steps you can take to improve your chances of securing a loan.

What credit score is needed for a car loan?

There’s no universal minimum credit score required to get an auto loan. However, having a low credit score may impact the loan terms and the interest rate you qualify for.

Generally, the lower your credit score is, the more you may be charged in interest to compensate for the risk. According to the FICO credit score system, which ranges from 300 to 850, any number below 580 is considered too low or “bad.”

Excellent credit: 800 – 850
Very good credit: 740 – 799
Good credit: 670 – 739
Fair credit: 580 – 669
Bad credit: 300 – 579

Types of lending options offering bad-credit auto loans

Many lenders offer car loans to borrowers with bad credit. Before you spend too much time applying or prequalifying for a car loan, check the requirements of each lender.

Knowing how each type of lender works in advance could save you time and energy later on. Here are some common types of lenders that offer car loans for borrowers with a low credit score:

Banks and credit unions
Online loan platforms
Online car retailers, such as Carvana
Auto dealerships

How to get a car loan with bad credit

Whether you’re looking to buy a car now or in the near future, there are a few steps you can take to help improve your chances of qualifying for a loan with more favorable terms.

Check your credit score and reports

When you apply for a loan, the lender has to gauge whether you can pay back the loan funds in full and on time. To understand whether you’re financially reliable, lenders will review your credit reports to check your credit score and payment history.

Before you start shopping for a car loan lender, get copies of your credit reports to check your credit score and history. Look for areas where you can make improvements, such as delinquent accounts or fixing errors. Addressing issues on your credit reports won’t immediately improve your credit score. However, it may increase your chances of qualifying for a car loan with more favorable terms.

Pro tip: You can get copies of all three credit reports for free once every 12 months from AnnualCreditReport.com.

Show that you can make monthly payments

In addition to your credit history and scores, lenders will check your sources of income to verify you can afford to make payments on time without any issues. When you shop around, expect them to ask the following:

Sources of income: Be ready with proof of your income and employment with a copy of a recent pay stub. If you don’t have a steady income, some lenders will accept other supplemental income sources, like child support, social security benefits, or disability payments.
Debt-to-income (DTI) ratio: Lenders will review your DTI ratio to understand how much debt you currently have. As a reminder, a DTI ratio is your total monthly debt divided by your gross pay. If you have paid off accounts and your debt isn’t as much as your credit report shows, address it with the lender.

Credit utilization ratio: Lenders will also check your credit utilization to see how much credit you’re already using. This is the sum of all your balances, divided by the sum of your cards’ credit limits. Lenders usually prefer borrowers to have a ratio of 30% or less.In the event that your utilization is high on your credit report, but you have paid down balances recently, be prepared with proof.

Payment history: Another big factor that lenders consider before granting a borrower a loan is payment history. If the lender notices a history of consistently missed or late payments, they’ll be hesitant to give you a loan with good terms. Be ready to talk to your lender about the circumstances of any late payments and why it won’t happen again.

Lower the amount you need to borrow

Before approving a loan, lenders will consider how much they can lose if you stop making payments. By lowering the risk of loss to the lender, you may increase your chances of getting approved for a loan. You can do this by reducing the amount you need to borrow from the lender.

Make a down payment: When you purchase a car, you’re usually required to pay a down payment or a portion of the price upfront. The remaining amount is divided into monthly payments that you’ll pay back over time.The more you contribute to the down payment, the lower your loan amount and monthly payment will be. A bigger down payment also reduces the risk to your lender, which may help you get a lower interest rate on your loan.

Trade in your old car: If you have a trade-in, check car value guides before you trade it in to understand how much it’s worth. This way, you can better negotiate what the dealer gives you for your trade-in, which means you’ll have less to finance.

Have a co-signer on stand by

If you have a low credit score, consider asking a friend or family member, someone you really trust, to be a co-signer. When they sign the loan with you, they take on the legal obligation to be a backup repayment source for the loan. Adding a co-signer reduces the risk to the lender and can help you qualify for a loan with a lower interest rate.

How to compare auto lenders

Once you have a better understanding of your credit score and history, shop around for different lenders. If you have trouble finding a lender that accepts your credentials, consider lenders known for working with people that have low credit scores.

Before you commit to a lender, get prequalified from a few to get an understanding of the type of loan terms they may provide. Then, you can better compare what lender and loan works best for you.

If you choose to submit applications with several lenders, remember that lenders will perform a hard credit inquiry, which may impact your credit score. It’s best to submit all applications within two weeks so the inquiries will be grouped into one.

Pro tip: Before you apply for an auto loan, or any loan, avoid opening new credit cards or loans. Doing so may hurt your chances of qualifying for a loan with better rates.

Alternative financing options

Getting a new auto loan and sticking with it for the entire loan term is a common way people finance their cars, but it is not the only way.

Get a loan and refinance it

If you can’t wait to get a new car, settle for a loan. Even if the loan has unfavorable terms, make monthly payments on time until you can refinance it.

If you’re looking to lower your rate later, a personal loan through Upstart may be worth exploring once your credit has improved.

Pay cash for a used car

Although you may want to get a new car, consider getting a pre-owned car from a private seller or dealer. You should do your research on the history of the car before you commit, but you may find the price will be lower than a new car. Depending on the price, you may be able to pay cash for a used car.

Wait until the time is right

If you cannot get approved for an auto loan, or you prefer not to pay cash for a pre-owned car, wait to buy a new car. While you wait, work on improving your credit score, paying down your debts, and saving money for a down payment.

Bad credit doesn’t have to limit your options

Bad credit can affect the loans and rates you qualify for, but it doesn’t mean you can’t borrow. Reviewing your credit profile and comparing lenders can help you understand your options.

If you’re looking to consolidate debt or improve your monthly cash flow, checking your rate through Upstart could be a worthwhile next step. You can see your options in minutes without impacting your credit score.

Upstart Network, Inc. (NMLS #936133) is not a lender. All loans on its marketplace are made by regulated financial institutions.

All mortgage lending is conducted by Upstart Mortgage, LLC dba Upstart Home Lending. (NMLS #2443873). Equal Housing Opportunity.

Checking your rate won’t affect your credit score: When you check your rate, we check your credit report. This initial (soft) inquiry will not affect your credit score. If you accept your rate and proceed with your application, we do another (hard) credit inquiry that will impact your credit score. If you take out a loan, repayment information may be reported to the credit bureaus.
Upstart’s model considers education: Neither Upstart nor its lending partners have a minimum educational attainment requirement in order to be eligible for a loan.
41% more approvals and 33% lower rates than a traditional model: As of publication in April 2026, and based on a comparison between the Upstart model and a hypothetical traditional model using Upstart data from Jan – Dec 2025. For more information on the methodology behind this study, please see Upstart’s Annual Access to Credit results here.
Unsecured Loans: While most loans through Upstart are unsecured, certain lenders may place a lien on other accounts you hold with the same institution. There may be an option to secure your personal loan through Upstart with your vehicle, which will require a lien to be placed on the vehicle. It is important to review your promissory note for these details before accepting your loan.
Loan amounts from $1,000 -$75,000: Your loan amount will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will qualify for the full amount. Minimum loan amounts vary by state: GA ($3,100), HI ($1,500), MA ($7,000). Maximum loan amounts may vary by state.
Closing and funding timeline: In April 2026, 10% of funded HELOCs achieved a closing timeline of 2 days or less and a funding timeline of 7 days or less. This timeline assumes consumers close with our remote online notary, provide supporting documentation promptly, and ensure the information provided is accurate and consistent with our verification process. Delays, discrepancies, and other unforeseen factors may impact the closing timeline. MBA’s 2025 Home Lending Study reports an average industry closing time of 37 days.
APRs from 6.2% – 35.99%, with 3 or 5 year terms: The full range of available rates varies by state. The lowest rates are only available to the most qualified applicants. A representative example of payment terms for an unsecured Personal Loan is as follows: a borrower receives a loan of $10,000 for a term of 60 months, with an interest rate of 17.50% and a 7.25% origination fee of $725, for an APR of 21.23%. In this example, the borrower will receive $9275 and will make 60 monthly payments of $252. APR is calculated based on 5-year rates offered in March 2026. There is no downpayment and no prepayment penalty. Your APR will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will be approved.
Instant deposits: To receive instant funding, your bank account must support instant transfers. If your account does not support instant transfers, funds will be available to you depending on your bank’s transaction processing time and policies.
Always On Commitment: We are committed to maintaining your credit limit as long as you continue to meet program eligibility and account requirements. To ensure the safety and security of all our members, we reserve the right to adjust or close lines in specific circumstances, including account default or late payments, suspected fraud, violation of our terms of service (including abusive behavior), or when necessitated by legal or regulatory requirements.
Cash Line draws: You may request a draw at any time. Only one draw may be outstanding at a time; after it is fully repaid, you may request another.
HELOC APRs as low as 6.52%: Terms shown here are subject to change without notice. APRs for initial advances range from 6.52% to 18.00% based on rates offered as of April 2026. The lowest rate is only available to consumers willing to become a member of a credit union and to those who meet a minimum FICO score of 780, CLTV under 70%, and DTI under 45%. Your actual rate will depend on many factors such as your credit history, combined loan-to-value ratio (CLTV), line amount, loan term, lien position, and property state. Origination fee to open an account is between 0% and 4.99% of the approved credit limit. The Annual Percentage Rate (“APR”) is variable and based on the Prime Rate as published in the Wall Street Journal “Money Rates” table plus or minus a margin. Your APR will never be less than 3.99% or greater than 18.00%. Property insurance is required.
No annual fee, prepayment penalty, or fees to redraw: Terms shown here are subject to change without notice. Origination fee to open an account is between 0% and 4.99% of the approved credit limit. The Annual Percentage Rate (“APR”) is variable and based on the Prime Rate as published in the Wall Street Journal “Money Rates” table plus or minus a margin. Your APR will never be less than 3.99% or greater than 18.00%. Property insurance is required.
2,500+ Variables:As of 3/31/2026. “Variables,” often also referred to as “features,” refers to raw variables and combined variables considered in our AI models. A “raw” variable is a non-combined, conceptually distinct unit of data, such as “applicant-reported savings.” A “combined” variable is data that has been transformed, combined, or otherwise engineered from a raw variable or set of raw variables, such as “applicant-reported savings” divided by “loan amount.
Fully automated loans: In Q2 2026. Percentage of Loans Fully Automated, which is defined as the total number of loans in a given period originated end-to-end (from initial rate request to final funding for personal loans and small dollar loans, and from initial rate request to signing of the loan agreement for auto loans) with no human involvement required by the Company divided by the Transaction Volume, Number of Loans in the same period.

How to get a car loan with bad credit?