If you live in the Los Angeles area and have bad credit, driving around Tinseltown in a fancy new sports car probably isn't in the cards. However, you can still get a new or used vehicle to get you around – you just need to know which types of car dealers accept bad credit in Los Angeles.
Types of Auto Lenders
You have to take into account many factors when you need a vehicle, but perhaps the biggest of these is your credit situation. This is why it's important to know your credit score and what's on your credit reports before you jump into any car buying situation.
Depending on your credit, there are different types of lenders in Los Angeles that can meet your auto financing needs. Not all lenders are capable of working with bad credit, and they don't work through every dealership. Lender's fall into three different categories:
- Direct lenders
- Indirect lenders
- In-house financiers
Direct lenders, like banks, credit unions, and finance companies, are the most difficult to work with if your credit is less than perfect. A member in good standing may have more luck through their credit union than a bank, and finance companies such as online lenders can often be hit or miss, depending on your credit.
Indirect lenders include manufacturer specific finance companies such as Ford Motor Credit and Toyota Financial Services. These types of lenders may work with people whose credit isn't outstanding, but not all of them do.
Mass market brands with affordable vehicles are a better bet than a luxury brand if you're looking for an auto loan through an indirect lender. Subprime lenders are also indirect lenders, and they typically work through special finance dealers, although a few work with buy here pay here lots.
In-house financiers also work with people who have credit challenges, including bad credit and no credit. These car lots are also called buy here pay here and tote the note dealerships.
Special Finance Dealerships
Subprime lenders work through special finance dealers, and they look beyond credit in order to assist people that are struggling with poor credit. These lenders, sometimes called second chance lenders, require specific qualifications to be met in order to extend you financing. You need to submit proof that you meet the requirements when you visit the dealership.
The qualifications for bad credit auto loans vary by lender, but you generally need to provide:
- Proof of income – Lenders around LA like to see that you make at least $1,500 to $2,000 a month before taxes from a single source. You need to prove it by bringing in a computer-generated pay stub from the past 30 days.
- Proof of residency – You're required to bring in a utility bill in your name at the address listed on the loan application.
- Proof of a working telephone – A bill in your name for a landline or contract cell phone at your address is required. Prepaid phone plans don't count.
- Down payment – Lenders that work with bad credit usually require a down payment. Typically, they ask for $1,000 or 10 percent of a vehicle's selling price, whichever is less.
As a bad credit car buyer in Los Angeles, you're also going to need to provide a valid driver's license, and have an employment record of at least three years with no major gaps in between jobs. This doesn't mean you need to have held your current job for that long, but you generally must have at least six months on your current job.
Buy Here Pay Here Dealerships
Buy here pay here (BHPH) dealers are the most lax when it comes to credit checks for bad credit borrowers, relying mostly on income and a down payment for approval. For a long time, most of these dealerships didn't bother with your credit at all. Keep in mind that even though you can get a vehicle at a BHPH dealer without a credit check, you're going to pay a premium for that service, usually in the form of a double-digit interest rate.
Though some BHPH dealerships are singularly focused on making sure you can afford to make your payments every week, this isn't the case for all BHPH dealers these days. Some check your credit and even report your loan and timely payments to the credit bureaus, which can help you improve your credit, although many still don't.
Regardless of whether or not a BHPH dealership checks your credit, it's still possible to get a car there. BHPH dealers are the lenders, so it's a one-stop shop for getting your vehicle and financing it, too.
When you get a car through a buy here pay here dealership, it’s not going to be a brand new model, since all the vehicles are used cars. Selection is limited to what's on the dealer's lot. This isn't to say these aren't good vehicles, but like any used car, it's best to have the one you want to buy inspected by a certified mechanic before you agree to anything.
Finding a Car Dealer That Accepts Bad Credit in Los Angeles
When you have bad credit, it can be tough to know where to look for the right dealerships that work with the lenders that can help you – especially around the City of Angels, where there's a seemingly endless choice of car dealers. If you want the hassle and time that it takes to traverse LA, with each dealership pulling your credit, until you find the right fit, that's fine. But there's a better way.
You could simply fill out our auto loan request form, and let Auto Credit Express do the searching for you. We work with dealers all around Los Angeles and the nation, and we want to help you find a special finance dealership for your situation. We've got over 20 years of experience matching consumers to the dealers that can help, and we want to help you, too.