With bad credit, getting any sort of new credit can be difficult. However, if you’re in need of a car loan, then you’ve got at least three types of lenders to consider, and we want to help you find them.
Bad Credit Auto Loans
Getting a car loan with bad credit doesn’t have to be hard. While you may be a little more limited in your choice of lenders, you may not be as limited as you think.
Easiest Option: BHPH Dealership
Arguably, the easiest way to get a bad credit car loan is by heading to a buy here pay here (BHPH) dealership. It’s easiest as a bad credit borrower because these dealers often skip the credit check, since they play a double role of dealer and lender. They don’t need to rely on the approval of a third-party lender, so they may not consider your credit history during the eligibility process.
BHPH dealers have some downsides to consider, though. You may be faced with a high interest rate, since skipping the credit check means taking on more risk for the dealer. To make up for this, they tend to charge more on their loans. Additionally, expect a down payment requirement, which could be up to 20% of the vehicle’s selling price.
Second Easiest Option: Special Finance Dealership
The second easiest way to get a bad credit auto loan could be heading to a special finance dealership. These dealers are signed up with subprime lenders who specialize in assisting borrowers with credit challenges. This can include bankruptcy, some habitual bad credit, no credit, or other situations that create a lower credit score.
These lenders do check your credit score, so it’s a factor in your eligibility. However, subprime lenders also take into consideration your work history, income, debt to income ratio, down payment amount, and more. They’re equipped to assist borrowers in many unique credit situations, so your situation holds a lot of weight in your eligibility.
The trickiest part of special financing is finding a dealership that’s signed up with these lenders – most dealerships aren’t very vocal about who their lending partners are.
Third Easiest Option: Credit Union
A credit union falls under the umbrella of a traditional lender, since they’re a direct lender and may require a good credit score. However, credit unions tend to be more lenient with credit score requirements than banks and the captive lenders of automakers. If you’re a long-standing member of a credit union, you may have a decent shot at qualifying for a car loan with them.
If you’re a new borrower, or a borrower with a few minor infractions on your credit reports, then a credit union may be a good route to explore. You can also increase your chances of qualifying by having a cosigner. However, you may not be able to qualify if you have serious negative marks on your credit report.
Looking for a Bad Credit Auto Loan?
One of the toughest parts of getting a bad credit car loan is finding the right lender. If you want to skip the search, then start with us at Auto Credit Express. We’ve created a coast-to-coast network of special finance dealerships. Complete our free auto loan request form, and we’ll get right to work looking for a dealer in your local area – no charge and no obligation. Get on the path to a car loan today!