There are certain facts that all bad credit car buyers need to come to terms with. The truth is, it’ll always be more difficult to get auto financing if you’re struggling with credit issues – but it’s not impossible.
Buying a Car with Bad Credit
When you need a car and have bad credit you need to know the facts so you’re as prepared as possible when it’s time to get a car. Here are three facts you should be prepared to face.
You'll pay higher interest rates
Interest rates are largely based on credit score, so the lower your score, the higher your interest rate. Rates also vary by lender. Not all lenders work with people who have credit problems, so you’ll likely need to find a special finance dealer who works with subprime lenders.
You'll need a down payment
Down payments often get a bad rep, but the truth is they can only help you in the long run. As a bad credit car buyer working with a subprime lender, you’ll typically have to provide a down payment of $1,000 or 10 percent of the vehicle’s selling price, whichever is less. However, the more money you can put down, the better. A down payment reduces the amount you have to borrow, which will save you in interest charges over the term of your loan. It also reduces the amount of time you’re stuck with negative equity.
You’ll have to meet certain qualifications
Subprime lenders look beyond a credit score to qualify bad credit car buyers for auto financing, but that means you need to meet the lender’s requirements, and provide proof that you meet them.
Typically these qualifications are:
- A minimum gross monthly income between $1,500 and $2,000.
- At least three years of employment history, with six months on a current job.
- Verifiable proof of residence, with a current utility bill in your name.
- Verifiable proof of income, with recent, computer-generated check stubs.
- Proof of a working landline or contract cell phone in your name.
- A valid driver’s license.
- Proof of insurance.
- Six to eight complete personal references.
The good news is that once you’ve met the specific lender requirements, having an auto loan is a wonderful tool for building and improving your credit. Each on-time payment helps to build a positive payment history, which plays a large part in your credit score.
Help Rooted in Facts, Not Fiction
Now that you’ve faced the facts and are ready to take the next step in credit improvement, let Auto Credit Express be your guide. Our knowledgeable experts and educational tips aim to help you not only get the vehicle you need, but build your credit for an even better car buying experience next time.
When you’re ready to put preparation into action and get your next vehicle, bad credit doesn’t have to stand in your way. We work with a nationwide network of special finance car dealers that have the lending resources ready to help consumers struggling with credit challenges. The process is free, and there’s never any obligation. We want to point you in the right direction, just fill out our auto loan request form to get started today!