Yes, you can get a car loan with bad credit, but it will usually be harder and more expensive than financing with good credit.
Bad-credit borrowers may still qualify through banks, credit unions, online lenders, dealer-arranged financing, subprime auto lenders or buy-here-pay-here dealerships. The main problem is cost. Lower credit scores often lead to higher APRs, larger down payment requirements, shorter lender choices and stricter approval conditions.
In Q1 2026, Experian reported that average new-car loan rates were 13.44% for subprime borrowers and 16.01% for deep-subprime borrowers. Used-car averages were even higher, at 19.42% for subprime borrowers and 21.77% for deep-subprime borrowers.
That does not mean every bad-credit buyer should accept the first loan offered. A larger down payment, cheaper car, preapproval, co-signer, credit union offer or short period of credit repair may reduce the total cost.
You can get a car loan with bad credit, but expect higher APRs and stricter terms. Before accepting a loan, compare multiple lenders, get preapproved, avoid unnecessary add-ons, choose a car you can truly afford and focus on total cost—not only monthly payment.
Bad Credit Car Loan at a Glance
| Credit situation | Approval outlook | Likely loan impact |
| Fair or near-prime credit | Possible with many lenders | Higher APR than prime borrowers |
| Subprime credit | Possible, but more limited | High APR, larger down payment likely |
| Deep-subprime credit | Difficult and costly | Very high APR, fewer lender options |
| No credit history | Possible with proof of income | Co-signer or down payment may help |
| Recent repossession | Harder | More lender restrictions |
| Recent bankruptcy | Possible after discharge in some cases | Higher APR and stricter underwriting |
| High income but low score | Better than low income and low score | Still likely higher APR |
| Large down payment | Helps | Lower lender risk |
| Co-signer available | Can help | Co-signer takes legal risk |
What Counts as Bad Credit for a Car Loan?
There is no single universal cutoff.
Many auto lenders use credit tiers. Experian’s auto finance data commonly groups scores this way:
| Credit tier | Score range |
| Super prime | 781–850 |
| Prime | 661–780 |
| Near prime | 601–660 |
| Subprime | 501–600 |
| Deep subprime | 300–500 |
A score below 600 is often treated as subprime or deep subprime in auto lending data. A buyer near 600 may still have more options than someone closer to 500.
Lenders may also use different scoring models, including FICO, FICO Auto Score, VantageScore or internal risk models. The score you see in a consumer app may not match the score used by an auto lender.
Read our guide to what credit score you need to buy a car for a deeper breakdown.
Can You Get Approved With Bad Credit?
Yes, approval is possible.
A lender may still approve a bad-credit borrower when the rest of the application is strong.
Approval can improve when you have:
- Stable income
- Low debt compared with income
- Larger down payment
- Cheaper vehicle
- Proof of residence
- Longer employment history
- No recent repossession
- A co-signer
- Positive recent payment history
- A vehicle that fits lender rules
Lenders are not only checking the credit score. The CFPB says auto lenders may consider credit score, credit history, income, debts and down payment when deciding what rate to offer.
How Bad Credit Affects Your Car Loan
Bad credit can affect nearly every part of the loan.
Higher APR
This is the biggest cost.
A higher APR raises monthly payment and total interest paid.
Larger down payment
Some lenders may require more money upfront to reduce risk.
Smaller loan approval
The lender may approve only a lower-priced vehicle.
Shorter list of lenders
Some banks and credit unions may decline, while subprime lenders may approve at higher cost.
Older or cheaper vehicle restrictions
Some lenders restrict the age, mileage or title status of vehicles they will finance.
Co-signer request
A lender may require a stronger borrower to share legal responsibility.
Higher chance of negative equity
High APR, long terms and small down payments can make the loan balance stay above the vehicle’s value for longer.
How Much More Does a Bad-Credit Car Loan Cost?
The difference can be large.
Experian’s Q1 2026 data showed:
| Credit tier | New car average APR | Used car average APR |
| Prime | 6.23% | 8.77% |
| Near prime | 9.67% | 14.03% |
| Subprime | 13.44% | 19.42% |
| Deep subprime | 16.01% | 21.77% |
A bad-credit buyer may still be approved, but the loan can cost thousands more than the same vehicle financed by a prime borrower.
This is why the goal should not be “get approved at any cost.” The goal should be “get approved on terms that are affordable and safe.”
New Car or Used Car With Bad Credit?
A used car often has a lower purchase price, but used-car loans may have higher APRs.
A new car may have:
- Higher price
- Better warranty
- Lower average APR
- Possible manufacturer promotions
- Lower repair risk
- Faster depreciation
A used car may have:
- Lower price
- Higher average APR
- More inspection risk
- Shorter warranty
- Lower depreciation from the original price
For bad-credit buyers, the better choice depends on total cost.
A lower-priced used car with a higher APR may still be cheaper than an expensive new car with a lower APR.
Compare:
- Out-the-door price
- APR
- Loan term
- Monthly payment
- Total of payments
- Insurance
- Repairs
- Warranty
- Expected reliability
Should You Get Preapproved With Bad Credit?
Yes.
Preapproval is especially useful when your credit is weak because it gives you a benchmark before entering the dealership finance office.
The FTC recommends checking banks, credit unions and finance companies first so buyers can compare dealer offers against written financing terms.
A preapproval may show:
- APR
- Loan amount
- Required down payment
- Term
- Vehicle restrictions
- Expiration date
Even if the dealer beats your pre approval, you still benefit because you know the offer had to compete.
Read our car loan pre approval guide before applying.
How to Improve Approval Odds With Bad Credit
1. Save a larger down payment
A larger down payment reduces the lender’s risk and lowers the amount financed.
It may also reduce:
- Monthly payment
- Total interest
- Negative-equity risk
- Approval difficulty
2. Choose a cheaper car
A smaller loan is easier to approve and repay.
Do not use the maximum approval amount as a spending target.
3. Get preapproved
Compare offers before the dealer conversation begins.
4. Compare multiple lenders
Different lenders may treat the same borrower differently.
5. Bring proof of income
Pay stubs, bank statements or tax documents can support the application.
6. Reduce existing debt
Lower debts can improve the debt-to-income picture.
7. Avoid optional add-ons
Add-ons increase the loan balance and may make approval harder.
8. Consider a co-signer
A strong co-signer can improve approval, but they take legal responsibility for the loan.
9. Fix credit-report errors
Dispute incorrect late payments, balances or accounts before applying.
10. Wait if you can
A few months of on-time payments and lower debt may improve the loan offer.
Should You Use a Co-Signer?
A co-signer with strong credit may help you qualify for a better loan.
However, it is a serious commitment.
If you miss payments:
- The co-signer’s credit can be damaged
- The lender may demand payment from the co-signer
- The co-signer’s borrowing ability may be affected
- The relationship may suffer
Use a co-signer only when the payment is truly affordable and both people understand the risk.
Do not use a co-signer to buy a car that is beyond your budget.
How Much Down Payment Do You Need With Bad Credit?
There is no fixed rule.
A bad-credit buyer may be asked for more money upfront than a prime borrower.
A larger down payment helps because it lowers the lender’s exposure. A down payment reduces the amount you need to finance.
A good down payment can also protect you from negative equity.
For example:
| Vehicle price | Down payment | Amount before fees |
| $20,000 | $0 | $20,000 |
| $20,000 | $2,000 | $18,000 |
| $20,000 | $5,000 | $15,000 |
The lower loan amount can reduce monthly payment and interest cost.
Watch the Loan Term
Bad-credit borrowers may be offered long terms to make monthly payments look affordable.
A longer term can lower the monthly payment but increase total interest and negative-equity risk.
For example:
| Loan feature | Shorter term | Longer term |
| Monthly payment | Higher | Lower |
| Total interest | Lower | Higher |
| Time in debt | Shorter | Longer |
| Negative-equity risk | Lower | Higher |
The CFPB warns buyers to compare more than monthly payment because a longer loan term can reduce the payment while increasing total cost.
Avoid Rolling Negative Equity Into a Bad-Credit Loan
Negative equity means you owe more on your current vehicle than it is worth.
Example:
- Old loan payoff: $15,000
- Trade-in value: $11,000
- Negative equity: $4,000
If that $4,000 is added to the new loan, you start the new deal behind.
For a bad-credit borrower, rolling negative equity can be especially risky because the new loan may already have a high APR.
The FTC advises buyers to ask how negative equity affects a new finance agreement before agreeing to the deal.
How to Rebuild Credit With a Car Loan
A car loan may help rebuild credit if it reports to credit bureaus and you pay on time.
To use the loan responsibly:
- Pay before the due date
- Set up automatic payments
- Keep insurance active
- Avoid missed payments
- Avoid refinancing into a worse term
- Pay extra principal if allowed
- Keep other debts under control
- Track the loan balance and vehicle value
One late payment can damage an already weak credit profile.
Before signing, confirm whether the lender reports on-time payments to major credit bureaus.
Frequently Asked Questions
Can you get a car loan with bad credit?
Yes. Some lenders approve bad-credit borrowers, but the loan may carry a high APR, larger down payment and stricter terms.
What credit score is bad for a car loan?
There is no universal cutoff, but scores below 600 are commonly considered subprime or deep subprime in auto finance data.
Can I get a car loan with a 500 credit score?
It may be possible, but approval is difficult and expensive. A large down payment, cheaper car or co-signer may help.
Can I get a car loan with no credit?
Yes, but the lender may require proof of income, larger down payment, co-signer or a smaller loan amount.
Are bad-credit car loans expensive?
Yes, they can be. Experian’s Q1 2026 data shows much higher average APRs for subprime and deep-subprime borrowers than prime borrowers.
Is dealer financing good for bad credit?
It can help find approval, but compare the APR, term and total cost carefully. Dealer-arranged financing is not automatically the cheapest option.
Is a credit union better for bad credit?
Sometimes. A credit union may offer better terms than a subprime dealer lender, especially for existing members, but approval is not guaranteed.
Should I use a buy-here-pay-here dealership?
Only after comparing other options. These dealers may approve poor-credit borrowers but can be expensive and risky.
Does a larger down payment help with bad credit?
Yes. It reduces the amount financed and may improve approval odds.
Can a co-signer help me get a better car loan?
Yes. A strong co-signer can improve approval chances and may reduce the APR, but they become legally responsible for the loan.
Should I buy new or used with bad credit?
Compare total cost. Used cars may cost less upfront but may have higher APRs and repair risk. New cars may have lower rates but higher prices.
Can a bad-credit car loan improve my credit?
It can if the lender reports payments and you pay on time. Missed payments can hurt your credit further.
Should I wait until my credit improves?
Wait if you can safely delay the purchase and improve your score, down payment or debt level. Buy only if the loan and vehicle are affordable.
What is the biggest mistake with bad-credit car financing?
Accepting approval at any cost. High APR, long terms, add-ons and negative equity can make the loan unaffordable.
What should I compare before signing?
Compare APR, loan term, amount financed, monthly payment, finance charge, total of payments, add-ons, fees and whether the lender reports to credit bureaus.
Summary
You can get a car loan with bad credit, but approval should not be the only goal.
A loan with a very high APR, long term, unnecessary add-ons and a weak vehicle can create years of financial stress. The safest path is to prepare before applying, compare several lenders, keep the car price realistic and avoid being pushed into a deal built only around monthly payment.
If you need a car now, use the smallest affordable loan that gives you reliable transportation. If you can wait, improving your credit and saving a larger down payment may lower the APR and make the purchase much safer.
Bad credit does not automatically block car ownership. It simply makes careful loan comparison more important.
