When you get the news that you got denied an auto loan, it’s natural to feel bummed when you wanted to disco. However, this could be a blessing in disguise, and now you can focus on what you need to do next.
Turn That Frown Upside Down
It’s not very fun to get a denial letter from a lender stating that you don’t qualify for a car loan, but you don’t need to panic.
What a denial really means is that the lender feels that you don’t meet the qualifications to get a vehicle financed right now. If they approve you for an auto loan, and you later find that you're in over your head, it could cause trouble down the line.
Being denied a car loan means the lender doesn’t feel quite right about extending financing to you, but don’t take it personally. This just means they looked at your situation, and determined that you may have to make some room in your budget, work on your credit score, or gain some form of stability in your situation.
Preparedness goes a long way in auto financing, and the more you know what you’re in for, the better you can plan, save, and improve your approval chances for next time.
After you’ve been turned down for a car loan, the lender is required to let you know why. If you haven’t found out yet, get a hold of them to ask about specifics and what areas you need to focus on. However, if you need a vehicle now and can’t wait to improve your situation, bad credit auto financing can help.
How Bad Credit Auto Financing Works
Most traditional lenders have credit score requirements, and a poor credit score can be the sole reason for a car loan denial. However, bad credit lenders, or subprime lenders, look at more than just your credit score. Instead of using a three-digit number to judge your eligibility for an auto loan approval, they take a look at your situation as a whole and tailor a loan to fit you.
Subprime lenders examine many different aspects of your financial state. This means taking a peek at your income, work history, living stability, and your credit reports as a whole.
These lenders often assist borrowers who’ve gone through bankruptcy, had a past repossession, or are new borrowers. They also work with borrowers who are just generally faced with credit challenges. For many consumers, subprime lenders can be a second chance at car financing.
Getting in touch with subprime lenders means locating a special finance dealership. Subprime lenders are third-party lenders that you never meet in person, since you sit down with the special finance manager at a dealer – they act on the lender’s behalf.
In order to see if you qualify for a subprime auto loan, you first submit the required documents (like check stubs and proof of residency) to a special finance manager at the dealership, who sends it off to one or more lenders. If you qualify with a lender, you’re told what you qualify for and work from there.
After you’ve taken delivery of your next vehicle, then you start making payments and you can build your credit score. Subprime car loans are reported to the major credit agencies, which means your on-time payments build your payment history.
A better credit score means qualifying for better rates in the future, and increasing your overall chances of getting approved for all types of new credit.
Looking for a Special Finance Dealership
Knowing that subprime lenders are signed up with special finance dealers can help relieve some of your fears when it comes to getting a bad credit auto loan. Remember, there's no need to panic if you're turned down for car financing once or twice. There are plenty of auto lenders in the sea, and with preparation, determination, and our assistance, you can land one despite your credit situation.
If you’re ready to start the search for your next car loan, then look no further. Here at Auto Credit Express, we’ve pooled together a network of dealerships that are signed up with subprime lenders, and match borrowers to these dealers at no cost. Get started right now by completing our auto loan request form.
