The short answer
Yes. You can get a car loan with bad credit — about 14.5% of auto loans in Q4 2025 went to subprime borrowers. The cost is the catch: subprime new-car APRs averaged 13.17% and used 19.42%, versus 4.77% for top credit. A larger down payment or co-signer can lower that rate.
Is it actually possible to finance a car with bad credit?
Yes, and it's common. Lenders approve borrowers across the entire credit spectrum, and roughly 14.5% of auto loans in Q4 2025 went to subprime or deep-subprime applicants. A low score rarely means an outright "no" — it means a higher interest rate, a bigger down payment, or a co-signer to offset the lender's risk.
The real question isn't whether you can get approved, but on what terms. Federal consumer guidance from the CFPB stresses comparing offers and reading the full terms, because the gap between a fair subprime loan and a predatory one is enormous.
What interest rate will you pay with bad credit?
Considerably more than a prime borrower. In Q4 2025, subprime borrowers (501–600) averaged 13.17% APR on new cars and 19.42% on used, while deep-subprime borrowers (≤500) averaged 15.43% new and 21.55% used. Over a five-year loan, that difference adds thousands of dollars to the total cost of the same car.
| Credit tier (score) | New-car APR | Used-car APR |
|---|---|---|
| Subprime (501–600) | 13.17% | 19.42% |
| Deep subprime (≤500) | 15.43% | 21.55% |
| Super prime (781+), for comparison | 4.77% | 7.67% |
These tier averages come from Experian's Q4 2025 data. Knowing your tier's average tells you whether a quoted rate is reasonable or a sign to walk — see what counts as a good APR.
Where should you get a car loan with bad credit?
Start with a credit union, which often offers the most forgiving rates to lower-credit members. Then compare online subprime lenders and your own bank. Get pre-approved before visiting a dealer so you arrive with a real rate to beat — and treat buy-here-pay-here lots as a last resort, not a first stop.
- Credit unions: typically the friendliest rates and most flexible underwriting.
- Online subprime lenders: built for lower scores; compare several offers.
- Banks: worth a quote, especially where you already have an account.
- Buy-here-pay-here: a last resort — very high rates, overpriced cars, and often no credit reporting.
How can you get a better rate with bad credit?
Lower the lender's risk and you lower the rate. The strongest moves are a larger down payment, a shorter loan term, adding a creditworthy co-signer, and improving your score for 60–90 days before applying. Getting pre-approved from several lenders then lets you choose the lowest real offer instead of the dealer's first one.
- Put more money down to shrink the amount financed — see how much to put down.
- Choose the shortest term you can afford to cut total interest.
- Add a co-signer with strong credit if one is willing and you understand the risk.
- Spend 60–90 days lowering balances and fixing errors to nudge your score up first.
Can a car loan help rebuild your credit?
Yes, if the lender reports to the credit bureaus and you pay on time. On-time auto payments build positive history, which can raise your score enough to refinance at a lower rate within a year or two. Avoid lenders — including many buy-here-pay-here lots — that don't report, since those loans can't rebuild anything.
- Confirm the lender reports payments to all three major bureaus.
- Pay every installment on time; payment history is the biggest scoring factor.
- Revisit refinancing once your score improves to escape a high subprime rate.
Frequently asked questions
What credit score is needed to get a car loan?
There is no fixed minimum — lenders approve loans across the credit spectrum, and about 14.5% of auto loans in Q4 2025 went to subprime or deep-subprime borrowers. A score below 600 simply means a higher APR, a larger down payment, or a co-signer, not an automatic denial.
Do buy-here-pay-here lots help or hurt bad-credit buyers?
They mostly hurt. Buy-here-pay-here dealers approve almost anyone but charge very high interest, sell overpriced cars, and often don't report on-time payments to credit bureaus, so the loan doesn't rebuild your score. Try a credit union or online subprime lender before resorting to one.
Can a co-signer help me get a lower car loan rate?
Yes. A co-signer with strong credit lowers the lender's risk, which can cut your APR substantially and improve your odds of approval. The catch is serious: the co-signer is fully responsible for the loan, and any missed payment damages both of your credit scores.
How much more do I pay on a car loan with bad credit?
A lot more. A subprime borrower averaged 13.17% APR on a new car in Q4 2025 versus 4.77% for super-prime, and used-car subprime rates reached 19.42%. Over a five-year loan, that gap can add thousands of dollars in interest on the same vehicle.
Sources
CarsLens is editorial guidance, not individualized advice. This page draws on Experian and the CFPB.