You may have seen or heard about certain car dealerships offering bad credit forgiveness or credit amnesty. This is just another way to say they offer bad credit auto loans, so don't think you're getting a true pardon, but you can still get the chance to finance a vehicle even with poor credit. How do you get a bad credit car loan? Keep reading to find out.
Dealers That Offer Bad Credit Forgiveness
When you have bad credit, you aren’t going to be able to walk into any bank or dealership and get approved for financing. Traditional lenders place a heavy emphasis on your credit score, and you can expect to be turned down if it's not in the best shape.
Regardless of your credit, you should try for a pre-approval from your current bank or credit union. They may be willing to work with you because of your existing relationship, so it's worth a shot.
If you’re turned down, there are two main types of auto dealers that offer bad credit forgiveness you should look into next:
- Special finance dealerships – These dealers work with subprime lenders that specialize in helping bad credit car buyers. Although subprime lenders check your credit score, they look at other factors to determine approval, such as your income, employment, residence stability, down payment, and more.
- Buy here pay here dealerships – Buy here pay here dealers are also the lenders, which means you can buy a vehicle and get financed at the same place. These dealerships typically don’t check your credit and base approvals on your income and down payment. The main downside is that they may not report loans or payments to the credit bureaus, which means you wouldn't be able to improve your credit score with one of these loans.
Qualifying for a Bad Credit Auto Loan
Now that you know the types of dealers you generally need to work with, how do you qualify with a dealership offering bad credit forgiveness?
The first thing is to make sure you meet their minimum income and down payment requirements. Most subprime lenders require a pre-tax minimum monthly income of $1,500 to $2,000 from a single source, although this varies. Buy here pay here dealers often carry a similar minimum income requirement.
Subprime lenders also usually require a minimum down payment of the lesser amount between $1,000 or 10 percent of the car's selling price. The down payment requirement at buy here pay here dealerships varies more widely, and often depends on the price of the vehicle you choose.
In addition, you often need to provide proof of income with a recent paycheck stub, proof of residence with a recent utility bill, a list of personal references, and proof of having a phone with a recent phone bill. If you’re working with a buy here pay here dealer, you typically just need proof of income and a down payment. Make sure to ask about what you specifically need before visiting to allow the process to go smoothly.
The Bottom Line
Things happen, and your credit score can take a hit if you fall behind on payments. If this sounds like you, and you’re worried about finding a car dealership offering bad credit forgiveness, have no fear, Auto Credit Express is here!
For over 20 years, we’ve been helping credit-challenged consumers get connected to dealers that can help them get financed. Fill out our quick and free auto loan request form to get started today.