A few of the basic requirements buyers with questionable credit need to meet in order to be considered for a car loan
What we know

Consumers that need a car but have concerns about their credit need to be familiar with some of the basic conditions that typically need to be met from most high risk auto lenders.

At Auto Credit Express we are familiar with most of them are because for the past two decades we've been helping car buyers with questionable credit looking for online car loans and matching them with those new car dealers who can offer them their best opportunities for loan approvals.

And while we don't mean to discourage anyone with problem credit from applying for a car loan, we also want to make it clear that even subprime auto lenders have guidelines that must be met.

Credit scores and time in the bureau

To start, applicants should know at least one of their FICO scores (most people have at least three – one from each of the major credit bureaus. The highest risk car lenders typically deal in the 550 and above FICO score range, although some will go as low as 500. Scores over a 640 are usually considered to be near-prime, while prime rates usually begin anywhere from 720 to 740.

Although higher risk lenders also offer loans to near-prime customers, credit unions, captive finance companies and a few banks are occasionally willing to work with these customers and typically can offer better interest rates and loan terms.

Next, most applicants cannot be credit "ghosts" (someone with little or no credit history). Unless you're young and applying for a car loan under a college grad program, having a credit history (time in the bureau) of at least 3 years is usually considered a minimum. Also considered a plus is having at least one prior auto loan on your credit reports.


Monthly income rules will vary by lender, but anywhere from $1,500 to $1,800 gross (before taxes) is normally the minimum income requirement. All else being equal, the higher the income the better the chances of a loan approval and the larger the available selection of vehicles (and lenders) will usually be.

Another consideration is that once the income level is met, lenders will then compare it to the total monthly debt level. This debt-to-income ratio will determine if the applicant has enough available income to qualify for a car loan plus the cost of auto insurance.

The ratio most lenders want is for an applicant's total monthly bills, including car and insurance payments, to not exceed 40% to 50% of their monthly gross income. In addition, most lenders also look for a monthly vehicle payment that's less than 15% to 20% of a borrower's total monthly income.

Down payments

More than a few car shoppers we've encountered have wanted to know how to buy a car with bad credit and no money down.

But the fact is that most high-risk lenders will require a down payment, either in cash or actual trade equity. They do this because customers that have their own money invested in a vehicle tend to keep making their monthly payments on time. Ten percent or $1,000 down (whichever is less) is usually considered to be the minimum amount.

It's also been proven that customers with the largest down payments also have better payment habits. So larger down payments will not only lower monthly payments but can also increase the chances of a loan approval.

Number of vehicles financed

These higher risk lenders typically will also not allow an applicant to have more than one car payment at a time. If a vehicle is currently being financed, it will either have to be paid off or traded in. In addition, they will not finance commercial vehicles, conversion vans, motor homes or any vehicle with a branded title (salvage, rebuilt, etc.).

More info

• Job time – The longer the better. Short job tenure can be offset by situations such as higher income, employment in the same field, lengthy residence time or home ownership.
• Bankruptcy – Most lenders will not finance consumers with either open or multiple bankruptcies. A few will consider someone in an open Chapter 13 but a court order to incur additional debt is required before they'll review the application.
• Accuracy – Be prepared to back up anything stated on the application (residency, wages, employment) with proof. Note to self: this is not the time to begin a "creative writing" career.

Where to begin the process

If you're wondering where to start, we're glad you asked. At Auto Credit Express we match applicants that have experienced car credit problems with dealers that can give them their best chances at car loan approvals.

So if you're ready to reestablish your auto credit, you can begin now by filling out our online car loans application.