Having bad credit can stand in your way for a lot of things, but a car loan doesn't always have to be one of them. When you need a vehicle with bad credit, make sure you go with the right type of lender to get the job done!

Subprime Lenders Can Help

Auto Loans for Bad CreditTypically, your best bet with bad credit is to go through a subprime lender. These lenders work through special finance dealerships and offer loans to borrowers that others typically reject.

Most lenders base auto loan approval on credit scores, but subprime lenders look at other factors as well to help get a full picture of your creditworthiness. These factors, such as your income, residence stability, and employment history, help lenders assess your ability, stability, and willingness to repay a car loan.

Let's take a look at what it takes to be considered for an auto loan from a subprime lender.

Bad Credit Auto Loan Qualifications

Specific requirements vary from lender to lender, but, generally, subprime lenders follow basic minimum guidelines regarding income, employment, proof of residency, and down payment requirements.

The typical qualifications are:

  • Proof of income – Most lenders require you to make at least $1,500 to $2,000 a month before taxes from a single job. You also have to provide proof of income with a recent computer-generated check stub showing year-to-date earnings. Your check stub often serves as proof of employment, as well. Most lenders require you to be employed at the same company for at least six months to one year, with a minimum employment history of three years.
  • Proof of residency – Lenders need to know that you have the stability to be successful in a car loan, and also where the vehicle you're financing is going to be parked. For this reason, proof of residence is also required. Bring in a recent utility bill or bank statement in your name showing the address listed on your application.
  • Proof of a working telephone – If a lender isn't able to contact you, you're going to have difficulty getting approved for auto loan. You must have a landline or contract cell phone in your name, and prove it by bringing in a recent phone bill. Prepaid phones aren't considered.
  • Personal references – Typically, lenders require a list of five to eight personal references, although the number varies. This has to include names, addresses, phone numbers, and email addresses.
  • Down payment – As a bad credit borrower, a down payment is usually required. Typically, lenders require a minimum of $1,000 or 10% of the car's selling price down, whichever is less.

Now that you know the general lending requirements you have to meet, it's time to find a dealer that has subprime lenders.

Finding a Dealership to Work With

Not all lenders can work with bad credit borrowers, and not all dealerships work with subprime lenders. With so many dealers today, how do you know where to start? Drivers Lane can assist with that.

You're already in the right place if you're looking for a dealership. We've been connecting people to local dealers that have subprime lenders for over 20 years, and we want to help you, too.

We work with one of the nation's largest dealership networks, so we can point you in the right direction from the start. To get the process started, fill out our fast and easy auto loan request form right now.