A rough credit score does not automatically lock you out of a better car loan. In 2025, borrowers with scores under 580 still received an average of four refinance offers through one major marketplace. So yes, you can refinance a car loan with bad credit, if you know where to look.
Can You Refinance a Car With Bad Credit?
Yes. Having bad credit may not disqualify you, especially if you have steady income and a current loan that is not in default. Lenders care about more than your score alone.
The catch is that auto refinance rates for bad credit are rarely as low as those for prime borrowers. You may still save, though, depending on what you pay now.
What Counts as Bad Credit Here?
Rates usually do not get competitive until you reach a FICO score around 670. Below that, options narrow, but they do not vanish.
Some refinance lenders work with scores as low as 560, and a few go even lower. Requirements like a few months of credit history and one open account are often more forgiving than you might expect.
Set Realistic Expectations
Refinancing with bad credit is about improvement, not perfection. Qualifying does not guarantee a lower rate than you have now.
Whether you save depends on three things: how much you pay today, whether your credit has improved since your original loan, and what you can qualify for right now, which are the same factors that decide whether it is the right time to refinance. Run the numbers before you commit.
The Best Place to Start
Because bad-credit approvals vary so much between lenders, comparing several at once is the smartest first move.
A refinance service like iLending is a strong fit here because it works with credit scores as low as 560, shops a network of 60+ lenders in one inquiry, and asks for only about six months of credit history and one open trade line. Its clients save an average of roughly $148 a month. Terms apply; APRs vary by creditworthiness.
iLending
iLending
iLending is an auto refinance service that pairs you with a dedicated loan consultant and shops your loan across a network of 60+ lenders. Clients save an average of $148 per month**, and you may be able to skip payments for 45-90 days while your new loan is set up*. iLending works with credit scores as low as 560 and delivers decisions in as little as 24 hours.
Standout feature
Skip payments for 45–90 days when you refinance*
Fees
Varies by lender
Pros
60+ lender network; accepts credit scores as low as 560; decisions in as little as 24 hours; average savings of $148/month**
Cons
Not available in HI, NH, RI; vehicles must be under 150,000 miles; consultation happens by phone
Steps to Improve Your Odds
A little prep can lead to a better offer:
- Check your credit report and dispute any errors before applying.
- Make your recent car payments on time, since lenders want a current loan.
- Keep other balances low to show breathing room in your budget.
- Apply to several lenders within a short window so it counts as one inquiry.
Even a few months of on-time payments can nudge your score into better territory.
Consider a Co-Signer
A creditworthy co-signer can change your options in a big way. A partner, friend, or family member with good credit may help you qualify or earn a lower rate.
Ask the lender how they treat two scores. Some average them, while others lean on the higher one, and that detail can affect your rate.
What Rates to Expect With Bad Credit
Setting expectations helps you spot a good offer. As of July 2026, used-car loans for borrowers with weaker credit can run north of 20% APR, while near-prime borrowers see rates closer to the high single digits to low teens. If you are paying a subprime rate now and your score or income has improved even a little, a refinance may move you down a tier. The goal is not a prime rate overnight; it is a meaningful step down from what you signed for.
A quick before-and-after tells you if it is worth it. On an $18,000 balance with 54 months left, moving from 18% to 13% lowers the payment by roughly $45 a month and saves thousands in interest over the remaining term. If your credit has not improved and current rates are similar to yours, waiting a few months to build payment history may earn a better result.
Build Your Score Before You Reapply
If today's offers disappoint, a short waiting period can pay off. Six months of on-time car payments, lower credit-card balances, and no new hard inquiries can nudge a subprime score into near-prime territory, where rates improve noticeably. Because a jump from deep subprime to near-prime can shave several percentage points off your rate, a brief pause is sometimes the highest-return move you can make. Recheck your report for errors along the way, since a single corrected mistake can lift your score on its own.
See More Options
It also helps to compare refinance offers next to other loan types before you settle.
A marketplace like myAutoloan connects you with 20+ lenders and covers refinance and lease buyout, so you can weigh several offers even with less-than-perfect credit. Terms apply; APRs vary by creditworthiness.
myAutoloan
myAutoloan
Find the right auto loan in minutes — even with bad credit. myAutoloan connects you with 20+ lenders to compare personalized offers for new cars, used cars, refinancing, and lease buyouts. Free to use with no obligation.
Standout feature
Compare offers from 20+ lenders. Works with bad credit. BBB A+ rated.
Fees
Free
Pros
Free to use with no obligation. Works with all credit types including bad credit. BBB A+ accredited.
Cons
Some users report receiving calls from multiple dealers after applying.
Frequently Asked Questions
What credit score do I need to refinance a car?
Many lenders prefer a score of 600 or higher, but some approve auto refinance with bad credit down to around 560 or lower. The lower your score, the higher your rate is likely to be, so compare offers carefully.
Will refinancing with bad credit lower my payment?
It might, especially if your credit has improved or your current rate is very high. There is no guarantee, though, so compare the new offer against your existing loan before signing.
Does applying with bad credit hurt my score more?
No, the hard inquiry affects everyone about the same way, a few points at most. Applying to several lenders within a 14 to 45 day window usually counts as a single inquiry.
Can I refinance a car with bad credit and negative equity?
It is harder, since most lenders want positive equity, but not impossible. A co-signer, extra cash toward the balance, or waiting until you owe less than the car is worth can improve your chances.
How long should I wait to refinance after improving my credit?
There is no fixed rule, but many borrowers see better offers after about six months of on-time payments and lower balances, which is often enough to move up a credit tier. Check your score before reapplying so you know whether a new tier is within reach.
Can I remove a co-signer later?
Usually only by refinancing again into a loan in your name alone, once your own credit qualifies. If a co-signer helps you get approved now, treat it as a stepping stone: pay on time, build your score, and refinance solo when the numbers work.
