If you want a better car, bad credit doesn't have to hold you back as long as you're working with the right dealership, and we can point you in the direction of one near you. First things first though, you need to know what types of dealers you could be working with.
Getting a Car Loan with a Subprime Lender
If credit repair is one of your top priorities with your next auto loan, you should be working with a subprime lender. Subprime lenders offer loans through special finance dealerships, and know how to handle challenging credit situations.
It’s not easy to find these lenders, since many dealers don’t heavily advertise the fact that they have a special finance department. Thankfully, Auto Credit Express can help you find one in your local area, but, first, it’s important that you understand the qualifications for subprime car loans.
While the specifics may vary, subprime lenders generally need you to meet these four requirements:
- Minimum income – Most subprime lenders require an income of at least $1,500 to $2,000 a month before taxes from one job. Bring in a recent computer-generated pay stub showing year-to-date earnings to serve as proof of income, or recent tax returns if you’re not a W-2 employee.
- Down payment – Most subprime lenders require you to make a down payment of $1,000 or 10% of the vehicle’s selling price, whichever is less. If your current car has equity, meaning it's worth more than what you owe on the loan, you can trade it in and use the equity as your down payment.
- Proof of a working phone – Subprime lenders want to make sure they can reach you, so usually require that you have a phone. Bring in a recent phone bill in your name showing the address listed on your application as proof.
- Proof of residency – Subprime lenders also require you to have a residence, so you need to bring in a recent utility bill in your name showing the address listed on your application as proof. These lenders like to see that you’ve lived in your area for some time, as this is seen as a sign of stability.
On top of these four items, you typically need to have a list of around five to eight personal references complete with names, addresses, home, and work phone numbers. Subprime lenders like to have a list of personal references in case they want to confirm any information you provide.
Working with a Buy Here Pay Here Dealership
Another type of lender you could go through is a buy here pay here (BHPH) dealership. These dealers offer in-house auto loans, which means they’re also lenders.
It’s easier to qualify for a BHPH car loan than a subprime loan. These places typically don't even check your credit, so you only have to meet their income requirements. As long as you earn enough and are able to make the required down payment, you should be able to qualify.
In some cases, BHPH dealerships report your loan and on-time payments to the credit bureaus, which gives you the chance to improve your credit score. However, this isn't always the case, so you're going to want to ask about their reporting practices before agreeing to anything.
In addition, vehicle selection is usually limited compared to a special finance dealer's lot. BHPH dealerships only sell used cars, and what you find on these lots can vary greatly in make, model, year, and mileage.
Ready to Get Started?
It's important to understand the different auto financing options you can work with if you have bad credit and want a better vehicle. No matter your credit situation, Auto Credit Express wants to help you get that better car you're looking for.
We work with a nationwide network of special finance dealers that are prepared to help people with bad credit get financed. Simply fill out our easy, no-obligation auto loan request form, and we'll get to work matching you with a local dealership!