When you have bad credit, finding a lender to approve you for a car loan can be frustrating. Fortunately, there are lenders that work with credit-challenged borrowers that may be able to get you into a reliable vehicle.
Bad Credit Car Loans and Dealerships
At one time, it was extremely difficult finding a lender that would approve someone with bad credit for a car loan. Luckily, things have changed, and subprime auto lenders are more readily available to help many bad credit borrowers.
If your credit score is below 660, you’re usually considered to be in the subprime credit score range. Unlike traditional lenders, subprime lenders (bad credit lenders), use more than your credit score to gauge your eligibility for a car loan, but not all dealerships work with them.
To be considered for a subprime auto loan, there are requirements that you must meet. Let’s go over the most common ones for a bad credit vehicle loan, and then where to find one of these lenders.
Requirements for Bad Credit Auto Loans
Not all subprime lenders are the same, so their rules to qualify vary. However, they generally use the same items to determine your ability, stability, and willingness to complete a bad credit car loan.
Common items include:
- Driver’s license – Must have your current address and be valid; not revoked, suspended, or expired.
- Minimum income – Gross minimum monthly income of $1,500 to $2,000, proven with a recent computer-generated check stub.
- Down payment – Subprime lenders typically require a down payment of at least $1,000, or 10% of the vehicle’s selling price, sometimes whichever is less. A trade-in with equity can help meet this requirement, as well.
- Proof of residency – Proven with a recent utility bill or bank statement in your name, with your current address. Generally, the longer you’ve lived at the same address or in the same area, the better.
- Proof of phone – Proven with a recent contract cell phone/landline bill; no pre-paid phones.
- Personal references – A list of five to eight personal references, with complete contact information. Can include family members, friends, and coworkers, but no one that shares your address.
Because your situation and every bad credit lender is different, more documents may be required to be considered for approval. However, most items aren’t difficult to locate. The better prepared you are, the less you’re left scrambling when you find a dealer that works with subprime lenders.
Finding a Bad Credit Lender
Once you find a dealership that works with subprime lenders, you submit the required items, and, if approved, the lender sends a payment call – the maximum monthly payment you’re allowed – to the dealer. The dealership shows you cars from their inventory that fit within that budget, you finalize the paperwork, and you take delivery.
However, finding a dealer with a special finance department can be like looking for a needle in a haystack. This is where we can help.
At Drivers Lane, we’ve teamed up with dealerships that have these special finance departments, and we want to help connect you to one. Our network spans the entire country, so we take away the hassle of driving dealer to dealer, looking for one that works with subprime lenders.
To get started, simply complete our auto loan request form. It's free, secure, and there’s no obligation to buy.