4 Types of Lenders That Offer Car Loans for Bad Credit
If you are in desperate need of a car, your credit should not be the reason to walk on foot.
Researched, written by 
Amber & The Team
Updated on August 9, 2023
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If you have bad credit, it can be challenging to get a loan.
Thankfully, some lenders offer car loans for bad credit.
These loans can help you buy the car by providing financing even if you have a less-than-perfect credit score.
Below are four lenders that offer auto financing for bad credit.
1. Direct Lenders
Direct lenders are banks and other financial institutions that offer loans directly to consumers.
These lenders provide a variety of loan options, including personal loans, home equity lines of credit (HELOCs), online payday loans, auto title loans, and more.
Direct lenders tend to have more stringent credit requirements than other lenders because they make money by lending at higher interest rates.
This means that if you have poor or moderate credit, it’s unlikely that you’ll qualify for a direct-to-consumer loan unless you can pay off the entire balance immediately upon taking out the loan.
2. Auto Dealerships
Dealerships are the most common source of auto financing for people with bad credit.
They offer financing through their own in-house financing departments.
Or, they can refer you to an auto finance company specializing in lending to people with bad credit.
Alternatively, you can go through a dealer with whom you have good credit and ask them to help you find financing elsewhere.
Many bad credit car dealers have relationships with outside lenders specializing in bad credit loans.
So, this may be possible if your situation qualifies.
3. Credit Unions
Credit unions are member-owned and operated, meaning that the credit union members (not shareholders) own the institution.
As a not-for-profit organization, a credit union offers its members competitive rates on loans, low or no fees, and other financial services such as checking accounts, savings accounts, and certificates of deposits (CDs).
Credit unions tend to be much smaller than banks because they have fewer locations.
However, their size can help them offer better rates because they don’t have the overhead costs larger institutions have.
Also, remember that some banks may partner with credit unions to offer better rates than they could otherwise get on their own.
These are called affinity partners.
4. Online Car Retailers
If you have bad credit, then an online car retailer could be your best option for financing a new or used car.
Online car retailers offer auto loans to people with all types of credit scores, including those with poor credit scores.
The primary benefit of an online car retailer over traditional lenders is that they can provide lower interest rates and higher loan terms than most banks and financial institutions.
Additionally, their lower down payment requirements allow them to offer loans with lower monthly payments than many other lenders would approve for borrowers with bad credit.
There are plenty of lenders that offer car loan for bad credit.
Nowadays, many people struggle with their finances and need a vehicle to get around town.
Bad credit is not an issue when you apply for financing through one of these companies.
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