A high-rate auto loan can cost you hundreds of dollars in interest payments. But refinancing your car loan may be an option. Refinancing often allows you to access a lower interest rate or a longer repayment term, lowering your monthly payments.
Many lenders will only work with borrowers who have good or excellent credit, which can make it challenging to refinance a car loan if your credit isn’t great. According to the FICO Score model, poor credit falls within the 300 – 579 scoring range, and fair credit is in the 580 – 669 range.
Getting approved for an auto loan refinance can be tricky with poor credit, but it’s not impossible. We’ve researched the best auto loan refinance options for bad credit.
In this guide:
Why would you refinance an auto loan with bad credit?
In general, the primary goal of refinancing an auto loan is to save money on a car payment. If your initial loan has a high rate, interest charges can tack on hundreds or even thousands of dollars to your total loan amount over its term. Refinancing may provide access to a lower rate.
Refinancing could also give you a longer repayment term, often meaning lower monthly payments. But since your payments are spread out over a more extended period, you could pay more interest than your original loan. Despite this, refinancing to a longer-term loan may make sense if you struggle to manage your payments.
Best auto loan refinance for bad credit
If you have bad credit and are interested in an auto loan refinance, finding a lender can be difficult but possible.
Be aware you’ll likely end up with a higher-rate loan than you would with good or excellent credit. You may also need to meet other requirements, such as having a certain income level.
We researched five loan marketplaces that offer auto refinancing to borrowers with bad credit.
OpenRoad Lending
Marketplace for auto loan refinance
- Will work with borrowers who have bad credit
- Refinance loans up to $100,000
- Vehicle must be 8 years old or less
OpenRoad Lending is an auto loan marketplace that lets prospective borrowers apply to refinance their car loans online. Unlike marketplaces that share limited information about borrower requirements, OpenRoad is transparent about its minimum monthly income requirements.
It also provides clear guidance on vehicle requirements. To refinance with OpenRoad Lending:
- Your vehicle must be eight or fewer model years old.
- It must have 140,000 miles or fewer.
- Your current loan must be between $7,500 and $100,000.
OpenRoad receives high marks from previous customers, with an average rating of 4.5 out of 5 stars across over 1,800 Trustpilot reviews. The company is also accredited with the Better Business Bureau (BBB) (aka BBB-accredited), with an A+ rating and an average of 4.35 out of 5 stars from 527 reviewers.
Key features:
- Minimum credit score: Varies by lender
- Minimum monthly income: $1,500
- Loan amounts: $7,500 – $100,000
- Repayment terms: 36 – 84 months
- Interest rates (APR): Vary by lender
RateGenius
Marketplace for auto loan refinance
- Permits cosigners and co-borrowers
- Minimum credit score requirement not disclosed
- Not a direct lender
With RateGenius, you can compare auto refinancing options from over 150 of its lending partners. You can apply for a refinance loan online or by phone and get approved in as little as one day.
RateGenius doesn’t disclose its minimum credit score requirements, but it indicates it works with various credit profiles. Borrowers need a minimum monthly income of $2,000 to qualify for a loan through its partners, and repayment terms of up to 72 months are available.
Similar to OpenRoad Lending, RateGenius receives positive feedback overall from its customers. It’s BBB-accredited, with an A+ rating and an average of 4.56 stars across over 850 reviews. It also rates well on Trustpilot, with an average of 4.6 out of 5 stars and over 4,025 reviews.
Key features:
- Minimum credit score: Varies by lender
- Minimum monthly income: $2,000
- Loan amounts: Vary by lender
- Repayment terms: 36 – 72 months
- Interest rates (APR): APRs range from 4.67% – 13.35%
CarsDirect
Marketplace for auto loan refinance
- Minimum credit score of 500
- Little published information on loans
- Not a direct lender
CarsDirect is an auto lending marketplace offering auto refinance and new vehicle purchase loans through partner lenders. Its minimum credit score requirement is just 500, making it a suitable option for fair- and poor-credit borrowers. Prospective borrowers need a monthly income of at least $1,500 to qualify for a loan with one of its partners.
CarsDirect is forthcoming with borrower requirements, but its loan details aren’t readily available through its website. The loan amounts, repayment terms, and APRs vary by lending partner, so keep this in mind as you use the site to compare offers.
CarsDirect isn’t BBB-accredited, but it earns decent reviews from Trustpilot users. Consumers give it an average of 3.8 out of 5 stars across 147 Trustpilot reviews.
Key features:
- Minimum credit score: 500
- Minimum monthly income: $1,500
- Loan amounts: Vary by lender
- Repayment terms: Vary by lender
- Interest rates (APR): Vary by lender
Auto Credit Express
Marketplace for auto loan refinance
- Minimum credit score of 500
- Not a direct lender
- Scant information on loans
Lending marketplace Auto Credit Express has a minimum credit score requirement of just 500, so you may qualify for a refinance loan through one of its partners even if you have bad credit. You’ll need at least $1,500 in monthly income and may need to meet other requirements depending on the lender.
Like CarsDirect, Auto Credit Express isn’t forthcoming about its loan offerings. Loan amounts, repayment terms, and loan rates aren’t available on its website. Auto Credit Express works with over 4,500 car dealerships to help borrowers find suitable financing options. You’ll likely have several loan options to compare.
Auto Credit Express earns high marks on Trustpilot, with over 3,400 reviewers giving it an average of 4.5 out of 5 stars. The company is BBB-accredited and has an A+ rating, but customers give it a poor star rating of just 1 out of 5.
Key features:
- Minimum credit score: 500
- Minimum monthly income: $1,500
- Loan amounts: Vary by lender
- Repayment terms: Vary by lender
- Interest rates (APR): Vary by lender
MyAutoLoan.com
Marketplace for auto loan refinance
- Minimum credit score of 575
- Clear borrower requirements
- Not a direct lender
Unlike many competitors, MyAutoLoan is upfront with its borrower requirements. Its minimum credit score and monthly income are clear on its website, which removes uncertainty for prospective borrowers.
This loan marketplace is also clear about its lending features and terms, providing a starting loan amount and repayment term range. It doesn’t disclose its maximum APR, but its loans start with an APR of 4.75% for borrowers with excellent credit. You’ll likely receive a higher rate with poor credit, but a starting point is helpful.
MyAutoLoan is well-rated on Trustpilot, with an average star rating of 4.1 out of 5 across almost 850 reviews. It’s BBB-accredited and has an A+ rating from the bureau, but it doesn’t fare well with customers on that platform. It averages just 1 out of 5 stars across four reviews.
Key features:
- Minimum credit score: 575
- Minimum monthly income: $1,500
- Loan amounts: Starting at $5,000
- Repayment terms: 24 – 72 months
- Interest rates (APR): Starting at 4.75%
How to choose the best bad credit auto loan refinance
When selecting a bad credit auto loan, consider several lenders’ requirements, available terms, and rates. Shopping around can help you get the best refinance loan for your situation.
Consider prequalifying with different lenders for insight into what rates you may get. Many lenders offer the option to prequalify with a soft credit pull, which won’t harm your credit score.
Once you’ve found a loan that meets your needs, gather the necessary documentation for your application. Many lenders request the following information as part of the application process:
- Copy of a government-issued ID
- Proof of income and employment
- Copies of bank statements
- Copy of your car loan documents
- Your vehicle identification number (VIN)
- Copy of your car insurance policy
Gathering this information before you apply can streamline the process. After you’ve applied, you’ll await a loan decision. The time frame for approval can vary by lender, but it may be as short as a day.
FAQ
How does bad credit affect my ability to refinance?
Bad credit can make it more challenging to refinance a loan. While many lenders work with borrowers who have good or excellent credit, fewer lenders offer options for those with poor credit. You may also receive a higher-rate loan if your credit is bad or fair.
Can I get a cosigner?
Some lenders may allow you to refinance your car loan using a cosigner. Using a cosigner with excellent credit may result in a lower-rate loan with a more desirable term. Cosigners also agree to assume responsibility for the loan if the primary borrower defaults, which helps mitigate the lender’s risk.
Are there ways to get lower interest rates with bad credit?
Working with a cosigner or co-borrower could help you get a lower interest rate. You may also work on improving your credit before you refinance because you’ll likely receive a lower rate with a higher credit score.
Can I refinance my auto loan if my car has been repossessed?
It will be difficult to refinance your auto loan if your car has been repossessed in the past. That said, specific lenders may allow you to do so. Be aware your refinance loan may have a high rate.
Can I refinance again after my credit score improves?
It’s possible to refinance your auto loan again if your credit improves. This could result in a lower interest rate.
Steps to take to help improve your credit score include:
- Make your monthly payments in full and on time.
- Take out a credit-builder loan.
- Avoid applying for several new accounts.
- Maintain a low credit utilization, which should be below 30%. (For example, if your credit card has a $10,000 limit, your balance should not exceed $3,000.)
How can I avoid scams and predatory offers?
To avoid scams and predatory offers, ensure you do your due diligence. Research lender history, look at what previous customers have said on sites such as the Better Business Bureau (BBB), and never sign anything you haven’t read. Also, compare options, and avoid loans with astronomical interest rates.
