Banks are direct auto lenders, and if you can be approved for a loan from these institutions, there are quite a few benefits. Having a lower credit score can make getting a direct loan tough, but you still have options if a bank doesn’t work out.
Banks are direct auto lenders, and if you can be approved for a loan from these institutions, there are quite a few benefits. Having a lower credit score can make getting a direct loan tough, but you still have options if a bank doesn’t work out.
Banks can offer many different types of direct loans, including mortgages and auto loans. In fact, banks are one of the most popular ways that borrowers get vehicle financing.
According to Experian’s State of the Automotive Finance Market in the third quarter of 2020, 25% of borrowers financed through a bank for a new vehicle. The remaining lenders include captive lenders (59%), credit unions (10%), and other lender companies (5%).
If a quarter of borrowers go to a bank for vehicle financing, they must have something going for them! Here are some benefits of financing a car through a bank:
Preapproval from a bank offers you the flexibility to choose where you can shop for a vehicle. If there’s a bank in your local area, it could be as easy as gathering your check stubs and driver’s license and heading to the bank’s brick and mortar location to get a preapproval. However, not everyone qualifies for vehicle financing at a bank.
The hard truth is that banks generally prefer borrowers with good credit, and they’re not known for having a lot of wiggle room.
Bad credit is usually defined as a credit score of around 660 or below. Even if you have a decent credit score, many direct auto lenders are wary of working with borrowers who have a vehicle repossession or bankruptcy on their credit reports. Though there are many benefits to financing a vehicle through a bank, borrowers who find themselves with tough credit circumstances typically have a better shot of getting a car loan with a subprime auto lender instead of a bank.
Subprime lenders are indirect auto loan financers, meaning you don’t meet with them like you would with a bank. Indirect lenders are often signed up with dealers, and you can apply directly through the finance department at the dealership. The finance manager works with you through the application process and lets you know if you’re approved for financing, and outlines what you can get based on what you qualify for.
Dealers that are signed up with subprime lenders are called special finance dealerships. These locations may be signed up with one or more subprime lenders, which could give you the chance to apply with multiple lenders with one visit.
Special finance dealerships can be a little tricky to find, but we’ve created an easier way to find the bad credit dealer you're looking for.
Not everyone qualifies for vehicle financing through a bank. If you can get a car loan through a direct lender, there are potential benefits, but a bank isn’t your only option when you need a car.
Here at Auto Credit Express, we want to make it easier and faster for you to find the lending resources you need to get an auto loan. With less than perfect credit, it can be a hassle to find a lender to work with – but we already know where the special finance dealerships in your area are.
Thanks to our expansive dealer network, we’ve been connecting bad credit borrowers to dealerships for over 20 years. Get started today by filling out our car loan request form. It’s completely free, carries no obligation, and we’ll get right to work finding a dealer in your local area that has bad credit lending options.
Senior Auto Financing Editor
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