A bad credit car loan is a special type of auto financing offered to borrowers with lower credit scores. These loans typically come with higher interest rates than those provided to borrowers with good credit.

Fortunately, there are many lenders that specialize in providing bad credit car loans. To find a lender, you can apply online or through a lending network like the ones listed below.

Dealership Financing

Dealership financing is an option for car buyers who may have trouble qualifying for an auto loan with a bank. Many dealerships work with a variety of lenders to offer a wide range of loan terms and rates. Some major automobile manufacturers even have their own captive lending divisions.

The benefit of dealer-arranged financing is one-stop shopping, a convenience that may appeal to some consumers. The disadvantage is that a onemain financial car loan dealer may have limited lender options and can negotiate interest rate offers less aggressively than a bank, credit union or online lender would. In addition, dealer-arranged loans often come with high documentation (or doc) fees.

When comparing interest rates, look at the annual percentage rate (APR) of each offer, including any doc fees. A lower APR can save you money over the life of the loan. You can improve your odds of getting a low APR by repairing damaged credit, and by making consistent, on-time loan payments. It’s also a good idea to make big down payments and to get a cosigner, as these can boost your borrowing power.

Buy Here Pay Here Dealerships

Buy here pay here, or BHPH, dealerships provide financing directly to car buyers. They are often able to offer more flexible terms than traditional lenders, especially for people with bad credit. However, it’s important to find a dealer that reports payments to the credit bureaus. That way, on-time payments can help improve your credit score and give you more options when it’s time to shop for a new car.

BHPH dealers also require large down payments, which can reduce your selection of vehicles. Additionally, if you miss payments, it’s likely that your dealer can repossess the vehicle more quickly than a conventional lender would. Some BHPH dealers even install devices in cars, such as GPS tracking and kill switches, that can prevent the vehicle from starting if a payment is missed.

Another potential downside is that these dealerships might not report your loan and payment history to the credit bureaus. This can impact your credit score, as payment history is one of the most significant factors in determining your credit score. It can also leave you with less chance of rebuilding your credit, whereas a conventional auto loan will always be reported to the credit bureaus.

Online Loan Marketplaces

Marketplace lending platforms, such as Credit Karma’s partner Navient Marketplace1, connect borrowers with a variety of loan options in seconds. Borrowers complete a single prequalification form and lenders present them with loans for which they’re eligible, based on their credit score, income, job history and other factors. Marketplace lending companies offer a variety of consumer loans, including unsecured personal loans, debt consolidation loans, auto loans and purchase financing, education loans, home equity loans and credit cards.

Many online car financing networks also specialize in bad credit lending. They can preapprove applicants the same day and then let them shop car dealers’ inventory online, allowing buyers to find a vehicle on their budget. This kind of network is a great option for those with bad credit who need a quick answer and can’t wait to get behind the wheel. However, it’s important to consider the interest rate on each loan offer, and be sure to factor in any fees that could increase your overall cost. Also, it’s generally best to include a trade-in or a large down payment when purchasing a car with bad credit to show that you have skin in the game.

Credit Unions

Credit unions are member-owned, nonprofit financial institutions that can offer the same consumer financial products as banks. They typically provide bank accounts, credit cards, loans and other services to members who are eligible. Some are open to all people, while others are limited to residents of specific geographic areas or employees of certain companies. Some are federally insured by the National Credit Union Administration (NCUA) and some are state-chartered. Credit unions also are sometimes known as community banks and caisse populaire or SACCO (in Canada).

A bad credit auto loan can help buyers who have a tarnished credit rating due to a bankruptcy, foreclosure, delinquent payments or another financial mishap. These loans may require a cosigner, higher interest rates and collateral to secure them. However, borrowers with a bad credit score can improve their ratings by making on-time payments on the loan. This will increase their lending power around Brooklyn and may reduce the interest rate they pay. Also, they can clean up their credit report by disputing errors and paying down debt faster if possible.

Auto Credit Express

Auto Credit Express specializes in finding financing options for buyers with tarnished credit histories, including those with no credit, past repossessions or bankruptcy. It matches borrowers with lenders and dealers that are likely to offer financing, which is available for both new and used vehicles.

Borrowers can access rates based on their credit scores, and the company provides a list of dealerships that accept trade-ins. In addition, the website offers educational resources and a tool that can help borrowers determine how much they can afford to spend on a car. However, the resource center page promotes third-party services that may come with fees and subscriptions.