Get Started with a Bad Credit Auto Loan

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You can never be too prepared for purchases as big as a car, especially if you're dealing with less than perfect credit. While most people know what bad credit is, not everyone understands what a bad credit auto loan is. If you're dealing with poor credit & need a vehicle, a subprime auto loan offers a way to get financed. It also gives you a chance to improve your credit as long as you make your loan payments on time each month.

Many dealerships aren't willing or able to work with borrowers with imperfect credit.

What is a Bad Credit Car Loan?

A bad credit car loan isn't like a traditional auto loan. There are different requirements you'll need to meet, and because not every dealer has a special finance department, finding a subprime lender to work with can be difficult. Bad credit car loans are designed for buyers with less than perfect credit or no credit. They're great for getting you on track in the credit world and back on the road driving.

If you're thinking of applying for a bad credit auto loan, you'll need to do some prep work. Make sure you have these three things covered:

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Typical Bad Credit Auto Loan Requirements

When you're faced with bad credit, getting a car loan isn't as simple as just picking out a new car, submitting a loan application, and signing the paperwork. Getting the financing you need while struggling with poor credit requires some additional steps and documentation. But the good news is that if you're serious about getting an auto loan, your credit doesn't always have to stand in the way. All you have to do is find the right lender and meet their qualifications.

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Situational Bad Credit vs. Habitual Bad Credit

Bad credit can be categorized into two different types: situational bad credit and habitual bad credit. When subprime lenders look at your credit profile, they'll take into account why your credit looks the way it does.

What is situational bad credit? - Situational bad credit is when your credit score drops due to something outside of your control. Many times, lenders who see car buyers with situational bad credit are willing to approve them for an auto loan. Examples of situational bad credit include:

BBB Rating
as of 02/28/2024

Rebuild Your Credit with a Car Loan

Did you know that an auto loan is a great tool to help turn around bad credit? In fact, poor credit doesn't have to be your enemy. Acknowledging your bad credit is the first step toward improvement. In order to take full advantage of the credit building potential of a car loan, you should know where your credit stands.

How to Buy a Car with Bad Credit

Having poor credit won't always stop you from getting an auto loan, but it does change the process of buying a car. One of the most difficult steps to getting a subprime auto loan is finding a dealership that's willing to work with you. Many lenders and dealers aren't very flexible when it comes to helping people buy a car with bad credit.

Car Dealerships for Bad Credit Near You

Before you head to a dealership, you can try to get financing through a bank or credit union you have a current relationship with. Although it can be hard to get pre-approved if your credit score is poor, it doesn't hurt to try. If you get turned down, the next step is finding a local dealership that offers bad credit car loans. These dealers have a special finance department and work with subprime lenders that cater specifically to credit-challenged car buyers. Once you apply through one of these dealerships and get approved, you can continue with the car buying process.

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