Best bad credit auto loan rates for January 2025

A closer look at our top picks for bad credit auto loans

What are bad credit auto loans?

Auto loans are secured loans that use the car you buy as collateral. A bad credit auto loan is essentially the same as a normal auto loan, but it usually has a more expansive acceptance criteria at the trade off of higher rates and fees.  

You are typically asked to pay a fixed interest rate and make monthly payments for 24 to 84 months, at which point your car will be paid off. Many dealerships offer their own financing, but you can also find auto loans at national banks, local credit unions and online lenders. 

When you finance a car it is often a secured loan, which tends to come with lower interest rates than unsecured loan options, like personal loans. According to the automotive finance study for the third quarter of 2024 by Experian, the average loan rates by credit score are the following.

Auto loan rates by credit score

Pros and cons of bad credit auto loans

4 tips on how to secure an auto loan with bad credit

It is possible to get a car loan with bad credit, although having bad credit will raise the rates you're offered. If you are having trouble getting approved or finding acceptable rates, follow these steps:

1. Make a large down payment: A larger down payment will lower your monthly payment, and it could also help you qualify for better rates because it reduces the amount you have to finance.
2. Get a co-signer: A co-signer with good credit will take on some responsibility for your loan if you default, but they can also help you qualify for the loan and potentially for a lower rate.
3. Reduce existing debt: Before applying for an auto loan, pay down as much debt as you can and avoid opening new accounts, like credit cards.
4. Check your credit report: At least 30 days before you plan on applying, check your credit report. Dispute any inaccurate information to get it removed and boost your score.

What to consider when refinancing your car with bad credit

If you are applying for a refinance loan with poor credit, keep the following constraints in mind. 

• Vehicle mileage: The number of miles clocked on your vehicle's odometer greatly impacts the value of your car. Lenders' constraints can differ by tens of thousands of miles, so check for these types of restrictions. 
• Age of vehicle: Many lenders will not refinance a vehicle over 10 years old.
• Loan amount: Most lenders present minimum loan amounts for refinance loans. Depending on your financial state, factor in the entire cost you will need.