It’s a common thing to try to get pre-approved for a car loan with a direct lender. Getting a pre-approval is a great way to reduce stress at a dealership, but it's harder to qualify for a direct auto loan if you have bad credit. However, you should still try for a direct loan anyway. Besides, there are other types of lenders you can check out if you can't get pre-approved.
Direct lenders are the type of lenders that offer pre-approved car loans. Getting a loan from a direct lender such as a bank or a credit union can be difficult with bad credit. This is because they tend to place a heavy emphasis on credit when qualifying applicants.
However, just because it's less likely doesn't mean it's impossible. You should still try to get pre-approved with a direct lender. You may have better luck if you start with your personal bank or credit union. If you're a longtime account holder or a member in good standing, they may be willing to approve you.
Credit unions are typically easier to work through with less than perfect credit, while banks tend to reserve their loans for people with good credit. However, you should try to get a direct loan first because banks and credit unions can typically offer rates that are lower than those of indirect lenders.
Even though they're likely to be lower, keep in mind that the rates you’re offered with poor credit are usually higher than the rates offered to borrowers with good to excellent credit.
What if I Get Turned Down?
If you’re turned down for a direct loan, don’t sweat it. There are lenders available to help you get the auto loan you need – and they may be closer than you think.
Subprime lenders work with bad credit borrowers, and they can be found at many dealerships all across the country. These lenders rely on other factors in addition to your credit score to approve you for a car loan, which means you have a better chance of qualifying for the loan you need.
Typically, subprime lenders ask for documentation to prove that you meet their lending criteria. These documents include:
- A valid driver’s license
- Proof of income
- Proof of employment
- Proof of residence
- Proof of a working telephone
- A list of five to eight personal references
Once you’ve gathered all your paperwork, it’s time to visit a dealer to apply for the loan you need! Since dealerships don’t always advertise their special finance departments, how do you find the right place to go? With the help of Auto Credit Express!
Finding the Dealer You Need
Here at Auto Credit Express, we work with a nationwide network of special finance dealers that help people with less than perfect credit get into new and used auto loans. We’d like to help you find a dealership to work with in your area.
To get started today, simply fill out our fast and free car loan request form. There’s no obligation to buy, and it only takes a few minutes, so you can get begin with confidence right now!