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Bad Credit Car Loans F.A.Q.

The most common and questions about car loans for people with bad credit bad credit are answered on this page. For additional information, read our short guide to bad credit auto loans.


Get the lowest auto loan rates:

Capital One Auto Finance offers the lowest auto loan rates in the country, for people with all types of credit ratings.

Apply with Capital One whether you are buying a new or used car, or even if you are buying from an individual. Whatever your choice, you will save thousands.

Auto loans
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If you have poor or no credit, click here to apply for special financing.


Car loans for people with bad credit

1. What is a bad credit auto loan?
A bad credit auto loan (also called a "subprime auto loan") is one with a higher-than-normal interest rate offered to buyers with poor credit histories or past bankruptcies. They usually involve more restrictions and requirements.

2. What should I look for in a subprime lender?
Reputation is key. Unfortuantely, the world of subprime loans has not always involved the most ethical elements of the lending world. Beware small-time outfits with offers that seem to good to be true.

Of our two recommended lenders, Capital One is the nation's leading automotive lender, and a subsidiary of Capital One, while Eloan is a multi-billion dollar mortgage giant that funds thousands of bad credit car loans each year. You can trust them.

3. Can I get an auto loan if I've had credit problems?
Probably, but you'll face some restrictions and higher rates. Lenders won't usually offer person-to-person auto loans or motorcycle loans to poor credit borrowers. And there is no escaping the higher interest. Any lender who says otherwise is not telling the whole truth.

4. Can I get an auto loan if I've had a bankruptcy?
Again, probably, but with loan restrictions and a higher interest rate.

5. How high an interest rate will I have to pay?
That depends on how bad your credit is. Fair credit borrowers may only have to pay a point or two over the best rate, while borrowers with very bad histories may face rates of between 10 to 20 percent.

6. What about special "in-house financing programs" offered by some dealerships?
Tread carefully here. Unscrupulous dealers are notorious for baiting poor credit borrowers with promises of special financing programs, and then sticking them with outrageous fees or high prepayment penalties. It's probably safer to go with a normal auto loan from a reputable lender.

7. What kind of car can I buy with bad credit car loans?
Most new cars, and some used ones that fit vehicle and price restrictions. No commercial vehicles. Motorcycle loans are hard to obtain with poor credit.

8. Where can I buy a car with a bad credit car loan?
Usually only from a franchised dealer (one authorized by a particular manufacturer to sell their new vehicles.) You can start searching for a new or used car now, at Autobytel.

9. Can I refinance my auto loan if I have bad credit?
You can try. If your credit hasn't improved, you probably won't be able to find an interest rate lower than your current one. But if you've had your loan for a while and have established a pattern of responsible payment behavior, you may be able to earn a lower rate. The best way to find out is by applying. Read more about auto loan refinancing.

10. Is there any way to lower the rate on bad credit car loans?
You can try a different loan amount or term to find which combination offers the lowest rates. But you're going to have to pay a higher-than-normal interest rate, at least until you've established a record of good payment behavior. At that time, you may want to look into refinancing your original bad credit car loan.