Best Places To Refinance a Car Loan With Bad Credit (2024)

All APR figures last updated on 3/3/2023 – please check partner site for latest details. Rate may vary based on credit score, credit history and loan term.

*The rating scores in this table reflect the scores from our general study and are not specific to refinance auto loans for bad credit borrowers. However, the providers in the table are ranked based on how they serve bad credit borrowers looking to refinance.

While we recommend any of the providers in this article, it’s best to get multiple quotes before making a decision. This helps ensure that you’re getting the best rate for your refinance needs.

Bank of America: Top Choice for Poor Credit

Loan amounts: $7,500 minimum ($8,000 in Minnesota)
Loan terms: 12 to 75 months
Availability: 50 states
Minimum credit score: None

Bank of America (BoA) is one of the largest banks in the world. And while many traditional banks don’t work with bad credit borrowers, BoA does not have a minimum credit score requirement.

The bank may be a good option for people looking for institutional support and convenience for car refinancing. In addition to a powerful and intuitive online experience, BoA has a sprawling network of branches and ATMs to provide in-person banking services around the country.

Bank of America Pros and Cons

MyAutoloan: Best Low-rate Option

Loan amounts: $5,000 minimum
Loan terms: 24 to 84 months
Availability: 48 states (not available in Alaska or Hawaii)
Minimum credit score: 575

Rather than a direct provider or financing broker, myAutoloan is a lending marketplace where customers can shop around between multiple lenders. Borrowers can find refinance auto loans, even with credit scores as low as 575.

The myAutoloan website also features a few helpful tools. You can use the site’s interest rate chart, interest rate estimator, and auto loan payment calculator to get a better idea of what you could end up paying to refinance your vehicle.

MyAutoloan Pros and Cons

Auto Credit Express: Good Choice for Bad Credit

Availability: 50 states

Borrowers who have a hard time finding car refinancing options elsewhere will want to look into Auto Credit Express. The company is a loan brokerage that specializes in securing financing for people with credit issues, including refinance auto loans for people with bad credit.

Through its network of lenders, Auto Credit Express also works with people who have filed for bankruptcy or have no credit history. However, the company isn’t just a last resort for people with credit issues. Auto Credit Express maintains a strong reputation within the loans industry and has high ratings online from customers.

Auto Credit Express Pros and Cons

The short answer is that yes, you can refinance an auto loan with bad credit. However, you may not have as many loan options available to you. Some lenders aren’t willing to work with borrowers who have less-than-ideal credit scores. In addition, you’ll likely have a hard time finding low-interest rates on auto loan refinancing.

How Soon Can You Refinance a Car Loan With Bad Credit?

You can refinance as soon as your auto loan deal closes as long as your lender has no wait time restrictions. However, most financial experts agree that waiting six months before refinancing often will get you the best terms for your situation. It also gives you enough time to improve your credit score and get your financial situation in order.

Getting a refinance auto loan with a bad credit score is very similar to getting one with any other credit score. But with more limited options for lenders and even fewer options for lenders with reasonable rates on bad credit car loans, you may need to do a little more legwork.

1. Check Your Credit Score

The first step to getting an auto loan refinance with a bad credit score is confirming whether you actually have a bad credit score. If it’s been a while since you’ve checked yours, it may have changed in either direction. Knowing your credit score can help you get a realistic idea of what rates you’re likely to receive and what your options are.

You’re entitled to a free credit report once a year through one of the three major credit reporting bureaus — Equifax, TransUnion or Experian. However, these days, many banks, credit unions, and credit card companies offer free credit score updates to their customers.

If you want regular access to a more detailed credit history, you can also pay to subscribe to a credit reporting service. This can help you identify items of concern on your credit report and work to fix them.

2. Find a Refinance Lender That Works With Bad Credit Borrowers

After getting a good idea of your credit situation, the next step to securing new financing is finding companies that will refinance your auto loan with bad credit. Fortunately, you have a few places to look.

Where Can I Refinance a Car Loan With Bad Credit?

Refinance auto loans are a popular financial product. That means that you can find them with a number of different types of lenders, even if you have bad credit.

Here are the main types of lenders:

• Traditional banks: Brick-and-mortar banks are still a popular source for auto refinance loans. Credit requirements vary between institutions, but some banks are willing to work with borrowers with bad credit.
• Credit unions: Credit unions are similar to banks but are member-owned instead of for-profit corporations. As a result, credit unions may offer better rates and offer refinance options to people with lower credit scores.
• Online lenders: Online-only lending institutions have fewer operating costs than traditional banks and as a result may be able to offer lower rates. The amount of these types of lenders — which are usually backed by larger banks — means that some specialize in different types of borrowers, including those with low credit scores.
• Auto loan brokers: Rather than going to a lender directly, you can work with a broker that will shop around for refinance auto loans for you. These companies typically operate online.
• Lending marketplaces: With the marketplace model, borrowers can enter their information and receive offers from providers directly. This allows people to easily compare several refinancing offers.

3. Shop Around for Your Best Options

Our team recommends that borrowers get multiple financing offers and compare them. When it comes to finding the best companies to refinance an auto loan for bad credit borrowers, the differences can be significant.

People with poor credit scores can sometimes feel desperate to find financing options. Some lenders take advantage of that fact, offering sky-high interest rates to those borrowers. But not all lenders act this way. Some do offer rates that, while higher than those for good credit borrowers, are still within reason. Comparing a few quotes can help you find the best rate for you and your credit situation.

Will Applying for Multiple Bad Credit Refinance Auto Loans Hurt My Credit Score?

It’s true that applying for any kind of loan — including a refinance auto loan — requires a hard credit inquiry. This will likely cause your credit score to drop some. That part is, unfortunately, unavoidable.

However, credit bureaus now weigh multiple hard credit checks for the same type of loan within a short period of time the same as just one. That means that there is no additional impact to your credit score to get multiple loan offers from different lenders compared to getting just one.

Refinancing a car loan with bad credit is a hard decision to make for most borrowers. So, to help you make a decision we’ve created a guide with information about what to consider before refinancing, what credit scores are and how to improve them, how to get better rates, and what market interest rates are.

Should You Refinance a Car With Bad Credit?

If you have a lower credit score it may be better to wait and build your credit before choosing to refinance. Oftentimes, lenders will not offer favorable terms when refinancing and it can be hard to find a better rate.

However, whether it’s a good idea to refinance depends on personal circ*mstances and the current market conditions. Some of the reasons you might want to refinance include:

• Take advantage of lower interest rates: If your original loan came with a high interest rate and you now have access to a lower one, refinancing can help reduce how much you spend on interest over the life of the loan.
• Shorten your loan term: You can choose to refinance to shorter terms. While this will increase your monthly payment, it will reduce the amount of time you need to pay on your vehicle loan.
• Lower your monthly payment: When you refinance your current auto loan, you can also choose to extend your loan to a longer term in exchange for a lower monthly car payment.
• Get a new lender: Whether it’s due to lots of fees, a bad customer experience or any other reason, sometimes you just want to part ways with your current lender.

Source: Capital One

What Factors Affect Your Credit Score?

Your credit score may be represented as just one three-digit number, but there are a lot of factors that go into that number. Here are some of the variables that make up your credit score:

• Payment history (35%): The record of how many payments you’ve missed in the last several years is the most significant factor in your credit score. Any missed loan payments — and especially payments missed in consecutive months — will bring your score down.
• Amounts owed (30%): Simply having debt to your name won’t necessarily bring your score down. However, how much debt you’re carrying compared to the credit you have available to you is an important component of your credit score. Traditionally, experts recommend not using more than 30% of your credit.
• Length of credit history (15%): Having older financial accounts in good standing will benefit your credit score. Your score could suffer if most of your accounts are only a few years old.
• Credit mix (10%): Another component of your credit score is the variety of credit accounts you have. Having a diverse mix of accounts, such as a mortgage, credit cards, personal loans and auto loans can benefit your score.
• New credit accounts (10%): Opening a new credit account or even applying for one that results in a hard credit check can lower your score. This drop, however, is usually temporary.

How To Improve Your Credit Score

The only way to access the lowest rates is to improve your credit score. This takes time and discipline, but the financial rewards for doing so are worth it. Here are some steps you can take to work on your score:

• Meet your obligations: Making your required monthly payments on time and in full is a critical part of raising your credit score. It won’t go up immediately, but over time a good payment history will lead to an improved score.
• Pay down debts: Making more than the required minimum payment to your debts and reducing your overall debt can help improve your credit score.
• Diversify your credit: If you only have one or two forms of credit, such as credit cards or an auto loan, taking on other types of debt and meeting your payment obligations can improve your credit mix. This can lead to an overall increase in your credit score.
• Don’t apply for too many loans: While you want to have a diverse portfolio of credit products, applying for too many types of loans in a short period of time can hurt your score. Take time between applying for loans and don’t overextend yourself.

In the graphic below are seven steps you can take to raise your credit score, and it can help you lower your auto loan rates when you refinance.

Bad Credit Auto Loan Interest Rates by Credit Score

Your credit score, also known as your FICO^® score, has a major influence on the interest rate you pay. Data from Experian show that borrowers with bad credit pay an average interest rate between 18.55% and 21.32% on used car loans. That’s around threetimes the average interest rate of 6.79% for borrowers with excellent credit.

The table below shows the average interest rate by credit score on a used car loan. This data comes from Experian’s most recent State of the Automotive Finance Market report.

Interest Rate vs. Annual Percentage Rate (APR)

When shopping for a refinance auto loan, you’ll often see the terms “interest rate” and “APR” used in similar ways — sometimes interchangeably. But while these terms are related, they mean different things.

The interest rate is the rate at which a financial institution charges you to borrow money. The APR, on the other hand, includes fees related to the loan and discounts in addition to the interest rate. Ultimately, the APR is what you will actually pay for your refinance auto loan.

How To Get Lower Interest Rates With a Poor Credit Score

Your credit score is the most influential factor in your loan rates, but it isn’t the only one. It takes time to raise your credit score, but there are some things you can do immediately that may get you a better refinance rate.

• Get a cosigner: Getting a trusted friend or relative with good or excellent credit to sign on to a refinance car loan with you can get you more competitive rates. However, if you miss any payments, it will impact both of your credit scores.
• Keep more equity in the vehicle: The loan-to-value (LTV) ratio is the percentage of how much you owe on the loan balance compared to how much the car is worth. You may get a better interest rate the lower that percentage is, so having equity in the vehicle could help you get a lower APR.
• Sign up for autopay: Many lenders offer a rate discount for setting up automatic payments. This discount is typically around 0.25%.
• Consider a shorter loan term: While longer loan terms will usually get you a lower monthly payment, they also typically come with higher interest rates. Taking on a shorter loan term might get you a better rate.

Refinancing your auto loan with bad credit may be difficult, but it can offer a chance to lower your rates and monthly payments on your current vehicle loan in the right circ*mstances. There are many companies willing to work with you to get a refinance car loan with bad credit. Plus, there are steps you can take to improve your credit score so you can find better rates.

The lenders in this article are our recommendations for the best bad credit refinancing lenders, but we recommend that you shop around and compare options to find the best deal for your situation.

Because consumers rely on us to provide objective and accurate information, we created a comprehensive rating system to formulate our rankings of the best auto loan companies. We collected data on dozens of loan providers to grade the companies on a wide range of ranking factors. The end result was an overall rating for each provider, with the companies that scored the most points topping the list.

Here are the factors our ratings take into account:

• Reputation (30% of total score): Our research team considered ratings from industry experts and each lender’s years in business when giving this score.
• Availability (20% of total score): Companies that cover a variety of circ*mstances are more likely to meet borrowers’ needs.
• Loan Details (15% of total score): We considered the types of loans, term lengths and loan amounts that are available from each lender to determine this score.
• Rates (25% of total score): Auto loan providers with low APRs scored highest in this category. Available discounts were also taken into account.
• Customer Experience (10% of total score): This score is based on customer satisfaction ratings and transparency. We also considered the responsiveness and helpfulness of each lender’s customer service team.

*Data accurate at time of publication.