Best Auto Loan Refinance for Bad Credit

Refinancing allows you to access a lower interest rate or a longer repayment term, lowering your monthly payments. But here’s the catch—many lenders will only work with borrowers with good or excellent credit, making 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 and 579 scoring range, and fair credit is in the 580 and 669 range. Getting approved for an auto loan refinance can be tricky with poor credit, but it’s not impossible. 

To get the most competitive rate, compare lenders and review the terms and fees carefully. We’ve researched the best auto loan refinance options for bad credit. Here’s how to qualify for a refinance loan with bad credit.  

The best place to refinance an auto loan with bad credit

Finding the right lender is essential if you have bad credit and are interested in an auto loan refinance. 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. 

But it’s possible to find a competitive rate with a reputable lender. We researched five loan marketplaces that offer auto refinancing to borrowers with bad credit. 

	Minimum monthly income	Repayment terms
OpenRoad Lending	$1,500	36 – 84 months
RateGenius	$2,000	36 – 72 months
CarsDirect	$1,500	Varies based on lender
Auto Credit Express	$1,500	Varies based on lender
MyAutoLoan.com	$1,500	24 – 72 months

OpenRoad Lending: Best for older cars

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• Compare loans via its marketplace
• High customer ratings
• Loans provided for all credit scores

OpenRoad Lending is an auto loan marketplace that lets prospective borrowers apply to refinance their car loans online. Borrowers must earn at least $1,500 each month. Minimum credit score requirements vary, but the company provides loans for all credit scores. 

The company’s transparency about vehicle eligibility helps it stand out. The vehicle model cannot be over eight years old, and the car cannot exceed 140,000 miles. The current loan for the vehicle must be between $7,500 and $100,000.

OpenRoad earns high marks from previous customers, with an average rating of 4.5 out of 5 stars across over 1,870 Trustpilot reviews. The company is accredited by the Better Business Bureau (BBB), with an A+ rating and an average of 4.62 out of 5 stars from 866 reviewers.

RateGenius: Best for co-borrowers

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• Auto loan marketplace for easy comparison
• Ability to add a cosigner or co-borrower
• Works with various credit profiles

RateGenius is a loan marketplace, so you can quickly compare auto refinancing options from over 150 lending partners. 

Apply online or over the phone and get approved in one business day. You can also add a qualified cosigner or co-borrower to your refinance loan, which might help you secure a lower rate. 

RateGenius doesn’t disclose its minimum credit score requirements but indicates it works with various credit profiles. Borrowers need a minimum monthly income of $2,000 to qualify for a loan. Rates range from 4.67% to 13.43%, depending on your credit score and the loan length. 

Based on positive reviews, borrowers are generally satisfied with RateGenius. It’s BBB-accredited, with an A+ rating and an average of 4.5 stars across over 717 reviews. It also rates well on Trustpilot, with an average of 4.2 out of 5 stars and over 4,030 reviews. 

CarsDirect: Best for thin credit

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• Compare offers from lending partners
• Minimum credit score of 500
• Loan terms not transparent

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 thin-credit borrowers. Borrowers need a monthly income of at least $1,500 to qualify for a loan. 

Even though CarsDirect is forthcoming with borrower requirements, its loan details aren’t readily available. 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. The company earns an average of 1.8 out of 5 stars across 148 Trustpilot reviews. However, the reviews primarily focus on the car-buying portion of the business instead of lending.

Auto Credit Express: Best for subprime loans

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• Minimum credit score of 500
• Partners with more than 4,500 dealerships
• Gets strong customer reviews

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. 

The company works with over 4,500 car dealerships to help borrowers find suitable financing options. You’ll likely have several loan options to compare. 

Like CarsDirect, Auto Credit Express isn’t forthcoming about its loan offerings. Loan amounts, repayment terms, and loan rates aren’t available. The company specializes in loans for borrowers who struggle to qualify, which means you can expect higher rates and less competitive terms. 

The company earns high marks on Trustpilot, with over 3,698 reviewers giving it an average of 4.5 out of 5 stars. The company is BBB-accredited and has an A+ rating, but there are only 12 customer reviews with an average star rating of just 1 out of 5.  

MyAutoLoan.com: Best for competitive rates

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• Minimum credit score of 575
• Loans starting at $5,000
• Transparent terms and requirements

Unlike many competitors, MyAutoLoan is upfront with its borrower requirements, which removes uncertainty for prospective borrowers. Compared to other lenders on the list, borrowers need a slightly higher credit score of at least 575.

This loan marketplace is transparent about its lending features and terms, providing a starting loan amount of $5,000. It doesn’t disclose its maximum APR, but its loans start with an APR of 4.99% 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 3.8 out of 5 across almost 900 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 six reviews.

Relationship between credit score and auto loan refinancing

Your credit score impacts your eligibility to refinance an auto loan. It also affects your interest rate, repayment terms, and fees. The higher your score, the less it costs to borrow money, and the reverse is also true—the lower your score, the more it costs. 

For example, imagine you are approved to refinance an auto loan with bad credit. You get a $20,000 loan with an 11% interest rate and a 60-month repayment term. Your monthly payment is $434.85. By the end of the loan, you will pay $6,090.91 toward interest. 

Now, imagine you have good credit and get the same $20,000 loan and a 60-month repayment term. But the interest rate is 4.99%. You would pay $377.33 per month and $2,639.98 toward interest. A higher credit score could save you nearly $3,500. 

The good news is that successfully refinancing your loan and making the required payments can help improve your credit score. Your score might temporarily decrease due to the credit check for the loan, but in the long term, with on-time payments, it can increase. 

Why would you refinance an auto loan with bad credit?

The primary goal of refinancing an auto loan is to save money on a car payment. When your initial loan has a high rate, the interest charges can add hundreds or even thousands of dollars to your total loan amount. Even if you have bad credit, refinancing may provide access to a lower rate. 

Here are other common reasons to refinance an auto loan with bad credit.

• Your credit score improved: If your credit score has improved since you applied for the initial car loan, you might be able to get a lower rate by refinancing. That’s true whether your score went from 500 to 600 or 600 to 700. 
• You want to change your repayment term: Refinancing could also give you a longer repayment term, often meaning lower monthly payments. But since refinancing extends the term, you could pay more interest than you would with your original loan. Despite this, refinancing to a longer-term loan may make sense if you struggle to manage your payments.
• You want to lower your monthly payment: You might need a lower monthly payment. Refinancing with a lower rate, longer repayment term, or co-borrower might help you accomplish that. 

How to choose the best bad-credit auto loan refinance

When preparing to refinance an auto loan with bad credit, 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

Preparing the information before you apply can streamline the process. After you’ve applied, you’ll wait for a loan decision. The time frame for approval can vary by lender, but it may be as short as one day. 

Ask the expert

Erin Kinkade

CFP®

Other options could be to borrow a car from a trusted friend or family member while you build your credit score/report. You could also add a cosigner. If you qualify with a high rate and have no other options, then go with the higher rate and, within the next six to 12 months, work on making on-time payments and reducing your debt-to-income ratio while also not applying for additional loans. Once your credit score improves, try refinancing the auto loan to better terms.

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 with 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 lower 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 like the Better Business Bureau (BBB), and never sign anything you haven’t read. Also, compare options and avoid loans with astronomical interest rates.