Bad credit car loans have different requirements compared to traditional loans. Finding a lender willing to work with credit-challenged car buyers can be difficult, too. At Auto Credit Express, we specialize in connecting buyers to subprime dealerships that can work with these situations. Here are our tips for getting a bad credit auto loan.
Things to Keep Track of
In order to get approved for a bad credit auto loan, you should know where you stand financially. Because buyers can get approved for different interest rates and loan terms, it’s best to keep track of how much you can afford for a monthly payment.
Four things you need to track and consider before applying for a bad credit car loan include:
- Finances – Before you begin the car loan process, make sure you’re able to afford a car, including fuel, repairs, and insurance. Car ownership goes beyond the sale of the vehicle, and while you may be able to afford a car payment, you won't qualify for financing if you can’t afford full coverage insurance.
- Credit scores – Another thing you need to do to get approved is to check your credit scores. Most auto lenders look at your FICO score, and it’s also a good idea to check your credit reports from the three national credit bureaus. Request your reports, check for errors, and know where you stand, credit-wise.
- Interest rates – Research the current trends in interest rates to see what people in your situation typically qualify for. Shop around and see what interest rates different lenders can offer. Remember, however, interest rates are based mostly on credit, so the lower your credit, the higher your interest rate is likely to be.
- Down payment – A down payment is required when you take out a bad credit car loan, so make sure you’re prepared for one. The general rule most subprime lenders follow is $1,000 or 10 percent of the car's selling price, whichever is lower.
Alternatives When Getting Financed
There are other ways to get financed with a bad credit auto loan if you don’t think you’ll be able to do it alone:
- Get a cosigner – A common way to get help is to have a cosigner. The cosigner signs the loan and agrees to the responsibilities that come with paying for it. Lenders like cosigners because it guarantees the loan will be paid back.
- Buy here pay here dealership – A last resort option is to visit a buy here pay here (BHPH) dealer. BHPH dealers don’t generally run credit checks because they offer in-house financing. They’ll approve anyone with proof of a qualifying income and have the car buying process done right then and there. While these dealers usually don’t have the newest cars on their lot, if you need a car fast, they have one for you.
Getting a bad credit auto loan doesn’t need to be stressful. If you’re looking to get financing, but worry your credit is holding you back, let Auto Credit Express lead the way.
We work with a nationwide network of special finance dealerships that have the lenders willing to work with people in challenging credit situations. Get started today, so we can match you with a local dealer. Simply fill out our online auto loan request form to get the process started.