Falling behind on car payments can have a major impact on your credit score and put you at risk of having your vehicle repossessed. Refinancing the loan to get a lower, more manageable monthly payment could prevent this from happening.
Though fewer options are available, and you’ll pay a higher rate, many lenders allow you to refinance, even with fair or poor credit. Below, we’ll review the six best auto loan refinance options for bad credit.
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6 best auto loan refinance companies for bad credit, reviewed
We analyzed a wide range of lenders, credit unions, and banks that will refinance a car with bad credit. Here are our top six choices.
OpenRoad Lending
Why we selected it
While OpenRoad Lending doesn’t disclose a specific credit score requirement, it works with borrowers who have “low credit scores,” with some getting approved with scores in the upper 400s. That’s great if you have poor credit and can’t keep up with your current car payment.
Plus, OpenRoad Lending offers additional services, including extended warranties and service contracts, making it the all-around best auto loan refinance for bad credit.
- Loan decisions in as fast as 1 minute
- Available to borrowers with “low credit scores”
- Additional services available, including GAP coverage and extended warranties
- Great customer reviews on Trustpilot and BBB
- Soft credit check with no impact to score
- Income from rideshare/taxi services doesn’t count toward minimum income
- Not available to self-employed individuals
- Maximum vehicle age of 8 years
| Rates (APR) | 4.29% – 17.99% |
| Loan amounts | $5,000 – $100,000 |
| Repayment terms | 4 – 7 years |
| Min. credit score | Not disclosed |
| Vehicle age and mileage limits | 8 years / 140,000 miles |
RateGenius
Why we selected it
Like OpenRoad Lending, RateGenius doesn’t publicly disclose minimum credit score requirements, but past customers have gotten approved with scores in the 400s. Your approval odds are great with RateGenius: It’s an online marketplace with more than 150 lenders.
- Network of 150+ lenders to find the best deal
- Co-borrowers permitted
- Available to borrowers with scores in the 400s
- Great customer reviews on Trustpilot and BBB
- Soft credit check with no impact to score
- High minimum loan amount ($10,000)
- Low maximum loan amount ($50,000)
- Approval can take up to 2 days
| Rates (APR) | 4.67% – 13.35% |
| Loan amounts | $10,000 – $55,000 |
| Repayment terms | 2 – 7 years |
| Min. credit score | Not disclosed |
| Vehicle age and mileage limits | 10 years / 120,000 miles |
iLending
Why we selected it
iLending is one of the best places to refinance an auto loan with bad credit, especially if you need time to catch up on payments. You can get up to 90 days of payment relief when you refinance, and you may also qualify to skip payments when money’s tight.
Plus, we love how transparent iLending is for customers. It clearly states its income and credit score requirements and publishes accurate APRs on the site. This is rare in the auto refinance world, where you often have to prequalify to learn more.
- Ability to skip payments
- Up to 90 days of initial payment relief
- Low minimum credit score and income requirements
- Great customer reviews on Trustpilot and BBB
- Soft credit check with no impact to score
- Administrative and documentation fees
- Limited control over lender match
| Rates (APR) | 5.49% – 18.79% |
| Loan amounts | $5,000 – $150,000 |
| Repayment terms | 1 – 8 years |
| Min. credit score | 560 |
| Vehicle age and mileage limits | 10 years / 150,000 miles |
PenFed Credit Union
Why we selected it
Although auto refinances are only available to PenFed members, joining the credit union is easy. While you’ll need fair credit to get approved, PenFed has the lowest rates of any lender on our list, and that’s what makes it one of the best credit unions for refinancing an auto loan.
- Lowest rates available
- Loans up to 125% of vehicle’s value (up to $150,000)
- Great customer reviews on BBB
- Soft credit check with no impact on score
- Approval with fair credit is possible, but not poor credit
- Credit union membership required
- Minimum credit score and loan amount not disclosed
- Lower score on Trustpilot than other lenders
| Rates (APR) | Starting at 4.19% |
| Loan amounts | Up to $150,000 |
| Repayment terms | 3 – 7 years |
| Min. credit score | Not disclosed |
| Vehicle age and mileage limits | Varies / 125,000 miles |
Upstart
Why we selected it
Upstart considers more than just your credit score when evaluating you for an auto loan refinance, which makes getting approved more attainable. The online application process is fast and easy.
- Approval process considers education, job history, and other factors beyond credit score
- Quick and easy online application, with no impact on credit score
- Vehicles as old as 13 years
- Loans as small as $3,000
- Great customer reviews on Trustpilot
- Soft credit check with no impact to score
- Not available in Iowa, Maryland, Nevada, or West Virginia
- Co-borrowers not permitted
- Low maximum loan amount ($60,000)
- Rates not disclosed
| Rates (APR) | Not disclosed |
| Loan amounts | $3,000 – $60,000 |
| Repayment terms | 2 – 7 years |
| Min. credit score | Not disclosed |
| Vehicle age and mileage limits | 13 years / 140,000 miles |
Caribou
Why we selected it
Caribou’s extensive network of lenders improves your approval odds, with some borrowers getting approved with vehicles that have as many as 200,000 miles on them. Caribou also offers several additional services, such as extended protection.
- Co-borrowers permitted
- Vehicles up to 200,000 miles may be eligible
- Up to 90 days of initial payment relief
- Additional services available, including extended protection and key replacement
- Not available in Maryland, Nebraska, Nevada, or West Virginia
- Loan amounts not disclosed
- Vehicle age requirements not disclosed
| Rates (APR) | 4.64% – 28.55% |
| Loan amounts | Not disclosed |
| Repayment terms | 2 – 8 years |
| Min. credit score | 580 |
| Vehicle age and mileage limits | Not disclosed / 200,000 miles |
How to refinance your car loan with bad credit
The best car loan refinance rates are reserved for borrowers with excellent credit scores and high, stable income. However, you can still refinance an auto loan even if you have bad credit.
Here are some tips to improve your approval odds:
Apply with a co-borrower
Some lenders allow you to add a co-borrower to your application. If your significant other or close family member has a better credit score and higher income than you, and they’re willing to apply for the loan with you, you can boost your approval odds. This will also help you secure a lower rate.
Demonstrate higher income
Make sure the lender has a complete picture of your income. For instance, if you have a side hustle that provides consistent income, demonstrate that with tax returns to supplement your W-2 income. If you receive consistent government benefits, they also count as income, and you should absolutely include them in your application.
Provide accurate vehicle information
The more valuable your car, the lower the loan-to-value ratio (LTV) is. And you’re more likely to get approved for a refinance with a lower LTV.
While lenders primarily use general data to determine your vehicle’s value, you may be able to submit additional documentation regarding your car’s condition and features to support valuation. For instance, if you have the highest trim level with advanced safety features and you upgraded to a premium sound system, lenders may be able to use this data when valuing your vehicle.
How much can an auto loan refinance save me each month?
For many drivers, the main reason to refinance an auto loan is to lower the monthly payment and add some breathing room to their budgets. In researching the best auto loan refinances for bad credit, we found that five of the six top companies we analyzed published estimated monthly savings between $105 and $159.
| Refinance lender or network | Estimated avg. monthly savings |
|---|---|
| OpenRoad Lending | $105 |
| RateGenius | $127.79 |
| iLending | $148 |
| Upstart | $127 |
| Caribou | $159 |
These numbers can vary depending on your credit score, the loan amount, and the loan term. The best way to figure out how much you can save on your auto loan by refinancing is to use our auto loan refinance calculator to input:
- Your current loan info
- Your anticipated refinance loan info
With these inputs, you can then see how much you’ll save each month.
Try out the calculator below:
What are the risks of refinancing your car loan with bad credit?
When you refinance an auto loan to lower your monthly payment, you introduce other risks and downsides to be aware of.
- Potential for higher rate: With a fair or poor credit score, you’ll likely get a high rate on your refinance. If your credit score has dropped since you first bought the car, the new rate may even be much higher than your current rate.
- Potential for a longer term: If you’re far along on your current car loan and you refinance to a longer-term loan to reduce your monthly payment, you’ll wind up spending more in interest over the life of the loan.
- Upfront costs: Some lenders charge upfront administrative and documentation fees when you refinance a car loan. At a minimum, expect to pay a title fee.
These are real drawbacks to consider before refinancing your auto loan for a lower monthly payment, but at the end of the day, refinancing may be necessary. After all, if you can’t afford your current car payment, you risk having the vehicle repossessed and further damaging your credit score.
Find out how late you can be on a car payment before repossession.
What to do if you can’t refinance your car loan with bad credit
If you can’t afford your car payment but also can’t get approved for a car loan, you aren’t out of options. Here’s what to do next:
1. Talk with your current lender
Start by chatting with your current lender. It may work with you to lower your monthly payment or offer a temporary payment pause if you can demonstrate true financial hardship.
The lender is under no obligation to help, but many will be willing to work with you to avoid having to repossess your vehicle.
2. Ask for help from friends and family
Borrowing money from friends and family can put relationships at risk (and feel a little awkward). But when you’re at risk of losing your vehicle, it’s worth swallowing your pride and asking for help. Just make sure you prioritize repaying your loved one as soon as possible, if they do help you.
3. Sell your car
If there truly is no way out, sell your car before the lender repossesses it and use the proceeds to pay off the loan.
Being without a car isn’t ideal, but you can find temporary solutions until you’re able to find a replacement vehicle, such as:
- Riding a bike
- Taking public transportation
- Borrowing a vehicle from a loved one
This can be a tough pill to swallow, but if you’re at risk of having your car repossessed anyway, this is the better path forward. When selling your car and paying off your loan, your credit score won’t take the major hit that it would otherwise.
How an auto loan refinance can hurt (and help!) your credit
An auto loan refinance might temporarily lower your credit score, but as long as you manage the loan responsibly, you could see an improvement over time:
Hard credit inquiry
The best auto loan refinance companies allow you to prequalify with only a soft credit inquiry, but to move forward, you’ll need to submit to a hard credit check. According to FICO, a hard credit inquiry typically lowers your score by less than 5 points and only affects your score for a year (though it remains on your credit report for two years).
On-time payments
Payment history is the largest factor affecting your credit score. If you make all your loan payments on time, you can expect your credit score to improve over time.
When you refinance to lower your monthly car payment, that payment becomes more manageable for your budget, reducing the risk of missing a payment and hurting your credit score.
Recap of the best auto loan refinance companies for bad credit
FAQ
Can you refinance an auto loan with bad credit?
Yes, you can refinance an auto loan with bad credit. However, your choice of lenders will be more limited, and you should expect to pay a higher interest rate than a borrower with excellent credit. You can improve your approval odds (and lower your rate) by applying with a co-borrower.
What credit score do you need to refinance a car loan?
Credit score requirements for auto loan refinances vary by lender. Some lenders, including OpenRoad Lending and lenders available through RateGenius, approve borrowers with scores in the 400s.
Article sources
At LendEDU, our writers and editors rely on primary sources, such as government data and websites, industry reports and whitepapers, and interviews with experts and company representatives. We also reference reputable company websites and research from established publishers. This approach allows us to produce content that is accurate, unbiased, and supported by reliable evidence. Read more about our editorial standards.
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About our contributors
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Written by Timothy Moore, CFEI®Timothy Moore is a Certified Financial Education Instructor (CFEI®) specializing in bank accounts, student loans, taxes, and insurance. His passion is helping readers navigate life on a tight budget.
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Edited by Kristen Barrett, MATKristen Barrett is a managing editor at LendEDU. She lives in Cincinnati, Ohio, with her wife and their three senior rescue dogs. She has edited and written personal finance content since 2015.