Having poor credit doesn’t mean you’re always out of luck when it comes to getting financing for a car – you just have to work with the right lender.

Poor Credit Car Loans

How Poor Credit Financing WorksHaving a poor credit score can mean auto loan rejections from traditional car lenders, which can get discouraging. Fortunately, poor credit auto lenders exist, and they offer loans through a dealership’s special finance department.

Poor credit lenders, also called subprime lenders, use more than just a credit score to make their loan decisions. They use your income, past credit history, and overall financial and residential stability to determine if you qualify a car loan.

This means you need to prove you have enough income to make the monthly payments, that you’re stable in terms of your living situation and employment, and have a down payment that shows you’re committed to completing the auto loan.

Once you complete a credit application, and submit all the needed items to the dealer, the special finance manager verifies the information and sends your application to one or more lenders. If you’re approved, a lender sends the dealership the credit tier you qualify for along with a maximum monthly vehicle payment. With that budget in hand, you and the dealer find a car from their inventory that fits within the payment call, and you take delivery of the vehicle.

Requirements for Poor Credit Auto Financing

Since subprime lenders use more than just your credit score, you need to supply some documents to prove that you can successfully repay an auto loan.

The specific requirements vary by lender, but they generally require these items to be considered for car loan approval:

  • Proof of identity – Proven with a valid driver’s license (not suspended, revoked, or expired).
  • Proof of income – Proven with a recent computer-generated check stub showing year-to-date income. Subprime lenders typically require a minimum monthly income of $1,500 to $2,000 before taxes from a single source.
  • Proof of residency – Proven with a recent utility bill in your name, or a bank statement in your name, with the correct address.
  • Proof of working phone – Proven with a recent landline or cell phone bill. If you have a prepaid cell phone, it typically won’t count.
  • Down payment – Bad credit lenders generally require a down payment of at least 10% of the vehicle’s selling price or $1,000, sometimes whichever is less. An equity trade-in can help meet this requirement.
  • Personal references – If you’re approved for an auto loan, subprime lenders usually require a list of around five to eight personal references with complete contact information. These can be anyone that doesn’t share your address.

Car Loans Can Help Your Credit

One of the best reasons to work with a subprime lender is that they report loans to the major credit reporting agencies. This means that if you keep up with the payments, you can improve your credit score. A better credit score means qualifying for better interest rates, qualifying for newer cars, and possibly taking advantage of better car buying or leasing deals in the future!

A subprime auto loan offers you the opportunity to not only get into a vehicle you need, but also the chance to repair your credit during the loan.

Find Poor Credit Financing Dealerships

Once you’ve gathered all the necessary documents, you can begin the hunt to find a subprime lender – but they can be hard to spot. Luckily, we’ve got the connections you need, and we can match you to a dealership for free.

At Auto Credit Express, we’re teamed up with dealers that have special finance departments that work with poor credit borrowers. We take the hassle out of driving and looking for a lender that can work with your credit situation. Simply fill out our free auto loan request form, and we’ll get started!