Getting approved for a car loan means satisfying the requirements of your auto lender, and, sometimes, simply finding the right lender for your credit and situation.
Finding a Bad Credit Car Loan
The first step in getting approved for a car loan with bad credit is finding a lender that can work with bad credit borrowers. Bad credit can mean something different depending on who you ask, but, generally, borrowers with credit scores below 660 are considered to have subprime credit scores.
If your credit score is below that, finding a subprime auto lender may be your best bet in getting into a car loan. However, you’ve got to prepare! To streamline the process of auto financing, we’ve gathered a list of requirements that you’re likely to come across if you want to finance through a subprime lender.
Common Subprime Lender Stipulations
When it comes to getting approved for a car loan with a bad credit lender, ability, stability, and willingness to pay are the keystones. The lender doesn’t just consider your credit score during the approval process, they also look at your income, debt, living situation, willingness to make a down payment, and more.
Some specifics that subprime lenders usually require include:
- Income – You typically must have a minimum gross monthly income of around $1,500 to $2,500, and you can prove your income with a recent computer-generated check stub.
- Work history – You usually must have been at your current job for around one year, and/or be able to show a three-year work history.
- Down payment – You generally must have a down payment of at least $1,000 or 10% of the vehicle’s selling price.
- Residency – You typically must have lived in the same residence for one year, or the same general area for three years, and your residence can be proven with a recent utility bill or bank statement in your name.
- Driver’s license – You must have a valid driver’s license with current address (can’t be revoked, expired, or suspended).
- Working phone – You must have a working cell phone/landline phone, proven with a recent phone bill in your name.
- Personal references – You usually must provide a list of around five to eight personal references with complete contact information. You can’t use someone that lives at your current address as a reference.
Gathering up your documents so that you can prove you meet these requirements is one of the biggest pieces of getting into your next auto loan. However, before you can apply for subprime financing, you need to find a dealership that’s signed up with these subprime lenders.
Special Financing and Bad Credit Auto Loans
Traditional dealers may not have the resources to work with bad credit borrowers; that’s where special finance dealerships come in.
Here, the special finance manager assists you on the lender’s behalf. The finance manager passes your information on to the lender, and if you meet all the requirements, you can get approved for a car loan.
Once you’re approved, you can work with the dealer to choose a vehicle that fits within your approval amount and satisfies your personal needs.
Car Loans Can Repair Credit
Having a good credit score can increase your chances of getting approved for an auto loan. But, you can also improve your credit score with a bad credit car loan.
This is because subprime auto loans are reported to the credit bureaus. This means that with on-time payments on the car loan, and managing the other aspects of your credit, you can work to rebuild your credit.
Better credit scores have a lot of benefits. It usually mean better loan rates, qualifying for better deals, and even saving money in terms of interest rates on credit.
Ready to Find an Auto Loan?
Poor credit can sometimes get in the way of an auto loan approval. You shouldn’t let your lower credit score get you down, though! If you’re struggling to find a lender that can look past your credit, we want to help.
Here at Drivers Lane, we have a network of dealerships that work with subprime lenders. To get matched to a special financing dealer in your area and get back on the road, start by filling out our car loan request form. It’s free, secure, and there’s never an obligation to buy a thing. Let’s get to work!