Here at Drivers Lane, we try and drive home the points about car loans for buyers with bad credit. We want you to know that our methods are tried and true. There’s no “dealer speak” or “bait and switch” going on with our advice – we just want to help you get a car loan with bad credit.
Lender Requirements and Credit Building Truths
The truth isn’t always pretty. When you have bad credit, the truth is that there are things you’ll have to overcome while you work on rebuilding it. But make no mistake, it does take work. If you need a car loan, there’s no getting around the requirements that subprime lenders have. Even if you opt to finance through a buy here pay here (BHPH) dealer, there are still requirements that you have to meet though they're based on income, not credit. Plus, a car loan from a BHPH dealer may not help you improve your credit.
Our Advice on Preparing for Lender Qualifications
We understand that bad things happen to good people and that it can be a chore to maintain good credit. But the truth is that no matter how far your credit has sunk, it’s recoverable. A bad credit car loan can help you do this, and our advice can help you get one.
Take these tips:
- Prepare your documents ahead of time. Going into a dealership prepared with proof of income, proof of residence, a valid driver’s license, at least six personal references, and proof of a working landline or contract cell phone in your name will be a huge time-saver if you’re serious about financing a car with bad credit.
- Make sure your budget allows for car and insurance payments. Not only will you need to prove to a lender that you make at least $1,500 to $2,000 of monthly pre-tax income, you also need to make sure your income isn’t spread too thin. Lenders do this by adding the cost of a car and insurance payment to your other monthly bills, and dividing that by your total income. If your bills plus an auto loan payment and insurance take up more than half your income, you may not get approved.
- Bring a down payment. No matter where you go, you’ll almost always need a down payment. For subprime lenders, the minimum is typically $1,000 or 10 percent of the vehicle’s selling price, whichever is less. The minimum varies by lender, or the dealer at BHPH lots. Also, when you’re working on credit building, the larger the down payment, the better. A large down payment means you borrow less, saves you money in interest charges over the term of your loan, and could improve your chances of approval.
- Have a cosigner on deck. Asking someone to cosign a loan for you is a serious matter. They’re not only putting their good credit on the line for you, but they’re agreeing to make the payments if you can’t. Though a cosigner isn’t always required, it’s often necessary when you’re taking out a bad credit car loan. So, just in case, it’s best to have a good friend or family member ready to say yes if the need arises.
With these tips and the proper preparation, your auto loan process is sure to be smoother.
Need to Find a Car Loan for Bad Credit?
At Drivers Lane, we offer more than advice. If you’re ready to find a bad credit car loan, but don’t know where to turn, look no further. We want to match you with a local special finance dealer that has the lending resources available to help people that are struggling with credit issues. The process is simple and obligation-free. Just fill out our online auto loan request form to get started right now!