When it comes to getting around Los Angeles, it's a good idea to have your own car. But what happens when bad credit makes it difficult to get a vehicle from a traditional dealership? The answer is to look for a special finance dealer that can help you get a bad credit car loan.
Bad Credit Car Loans in Los Angeles
A bad credit auto loan, or subprime auto loan, comes from specific lenders that can help when you have less than perfect credit. Not all lenders work with borrowers who have low credit scores. In fact, some lenders in Los Angeles only work with people whose credit scores are good – generally defined as a score above 670.
When you need a bad credit car loan, working with a subprime lender means meeting more requirements than you'd be asked to meet with a traditional lender. This may sound inconvenient, but it's actually a good thing.
These additional requirements mean you're more than just a credit score to these lenders, and that they're concerned with your ability to comfortably afford an auto loan. For these reasons, they base financing consideration on your ability, stability, and willingness to complete the loan.
In order to meet the lender requirements for a subprime car loan, you typically need to meet certain qualifications, which can include: proof of income, employment, residence; a valid driver's license; and a minimum down payment. These conditions can vary from lender to lender.
Bad Credit Auto Loans Work Differently
Typically, when people think about getting an auto loan, they begin by picking out the vehicle they want and finding a dealership that has it. This method is fine for people with good credit, but the process of getting a car loan is almost the opposite when you have poor credit.
The first thing you need to find in order to apply for a subprime auto loan in LA is a dealer that works with these lenders. From there, you have to provide the dealership with your personal information and the documents needed to show proof of your income, employment, and residence, along with any other items requested.
Once you do, the dealer works with the lender on your behalf, and lets you know which vehicles on their lot you qualify for. This process doesn't mean you can't get a vehicle that meets your needs, it just means that you may not be driving away in your dream car right now.
Tips for Getting a Car Loan in LA
If you're looking for your next auto loan in Tinseltown, keep these tips in mind:
- Know your credit – Knowing your credit score and what's on your credit reports is a good place to start with any car loan. When you know where your credit stands, you're able to research average interest rates, and, therefore, able to tell when a lender's offering you a fair interest rate on a loan.
- Have a budget – Getting a great deal on an auto loan doesn't mean a thing if it's still outside of your budget. To make sure you know what you can comfortably afford, know your debt to income ratio. This is what the lender uses to see what kind of payment you can afford. If your existing bills, including an estimated car loan and insurance payment, takes up more than 45% to 50% of your income, you may not be approved for a loan.
- Have a down payment ready – Down payments are usually required for subprime auto loans. Typically, lenders require a minimum of $1,000 or 10% of the vehicle's selling price, but the larger the down payment you can provide, the better off you are. A down payment reduces the amount of your loan and saves you money in interest charges over the course of it.
- Get a cosigner – In some cases, a lender may ask you to provide a cosigner for loan approval. Even if one isn't required, a cosigner can lend you their good credit score, and give the lender the confidence to approve you for a loan if they're on the fence.
Finding a Dealer for Your Next Loan
When you need a subprime car loan in Los Angeles, you may need help finding a lender. Not all dealerships work with the kind of lenders that can help borrowers with poor credit. Rather than driving all around the city searching, simply fill out our auto loan request form and we'll do the searching for you.
Here at Auto Credit Express, we work with a network of special finance dealers all across LA and the rest of the nation that have the lenders ready to work with bad credit borrowers. Don't hesitate any longer, start here and let us match you with the dealership you're looking for!