There are a lot of places to shop when you need a car in Los Angeles. However, your choices could be limited if you have poor credit. This is because the process of getting an auto loan with bad credit works differently than a traditional car loan.
The Car Loan Process
The process of getting a bad credit auto loan may seem backward, and, in fact, it is when you're comparing it to a traditional car loan scenario. Let us explain:
With a good credit auto loan, a borrower has the power and history of their good credit behind them. Their credit score might be well over 700, and their credit reports are likely to show an outstanding payment history with years of charges and bills paid on time. Most lenders take this as a sign that this borrower is responsible.
For these borrowers, picking out a vehicle, negotiating a price, and finalizing the financing paperwork is the norm. They can do this at any dealership that has the car they're looking for, or they can get pre-approved by a direct lender like a bank or credit union, making the process even easier once they visit a dealer.
With bad credit, the process typically begins at a dealership. Since bad credit borrowers generally need a subprime lender to get approved for financing, they have to go through a dealer that uses these lenders. Not every dealership works with subprime lenders, and not all lenders work with bad credit buyers, so it's important to work with the right one.
Once these borrowers find the right dealer, their special finance department submits their auto loan application for approval. If the lender approves them, they transmit what's known as a "payment call" to let the dealership know what the customer is qualified for. Then, the customer is presented with a list of vehicles within the lender’s guidelines to choose from.
Getting a Bad Credit Auto Loan in Los Angeles
In order to get approved through a subprime lender, you have to meet a number of qualifications, which vary by lender. Usually, these include:
- Proof of income – You generally need to make between $1,500 and $2,000 a month before taxes from single source. You should bring a recent computer-generated paycheck stub that shows year-to-date income to serve as proof of income.
- Proof of residence – You should provide a recent utility bill in your name at the address listed on the application.
- Proof of a working phone – Bring a recent phone bill to prove that you have a working one. This can be a landline or a contract cell phone, but prepaid phones usually aren't accepted.
- A list of personal references – You're typically asked to provide between five and 10 personal references. You must include names, addresses, and home and work phone numbers (if applicable) on your list.
- Proof of identity – Most lenders require a valid driver's license, though some accept a valid state ID. Keep in mind that you can't register a car without a valid driver's license.
Now that you know what it's going to take to get an auto loan with bad credit, it's time to find a dealer to work with in Los Angeles.
Finding a Special Finance Dealership in LA
Because you can't go just anywhere in Los Angeles to get approved with bad credit, you need to know where to look before you start driving up and down the Harbor Freeway looking for someplace to get a loan. With that in mind, why not try an easier solution?
Here at Auto Credit Express, we're your hassle-free access to special finance dealerships in your area. We've been connecting bad credit borrowers to local dealers across the country for over 20 years now, and we want to help you, too. Simply fill out our easy car loan request form and we'll get to work matching you with a dealership near you!