Having a tarnished credit score can impact your vehicle buying power, but it’s not the end of the line just yet. Whether your credit is bad or really bad, there are bad credit car loan resources available and we want to help you find them.
Bad Credit vs Really Bad Credit
At Auto Credit Express, we often get messages from borrowers saying,
“I have really bad credit – can I get a car loan?”
Many consumers tell us their specific credit score and ask if they’re able to get financing – but credit scores range quite a bit. A credit score around 660 or below is generally considered bad credit. The FICO credit scoring model has a range between 300 to 850, so it’s a large spectrum.
Here's a breakdown of the credit score ranges:
- Super prime: 781 to 850
- Prime: 661 to 780
- Nonprime: 601 to 660
- Subprime: 501 to 600
- Deep subprime: 300 to 500
Getting into a traditional car loan can be tough once you get into the 600 and lower range, since most direct lenders from banks, credit unions, and online lenders require a good credit score for approval. Bad credit can make it tough to get a car loan, but it’s not impossible, and there’s more to vehicle financing than your credit rating.
Bad Credit has Different Causes
It’s important to keep in mind that the information on your credit reports creates your credit score. This is what many lenders are concerned about, especially if you have a lower score.
For example, a borrower with a recent repossession may have more issues applying for a car loan than a borrower whose bankruptcy was recently discharged. A borrower with poor credit as a result of a lacking credit history may be looked upon more favorably than someone with a long credit history that has many negative marks. All of these scenarios involve having a lower credit score, and they all have different odds of affecting your auto loan approval chances.
In other words, what leads to the lower credit score influences your approval odds, too – not just the three-digit number that makes up your credit score.
It’s possible to get into an auto loan with poor credit if you work with the right lender and you can prove you’re able to manage new credit. Subprime auto lenders, or bad credit lenders, take a closer look at your individual situation to determine your car loan eligibility because your credit score only tells part of the story.
Subprime Auto Lending
For borrowers that don’t meet the requirements of a traditional lender, a subprime car loan could be the answer.
These lenders are signed up with special finance dealerships. They often assist borrowers that have situational bad credit, no credit, bankruptcy on their credit reports, and even those who have a repossession reported. They do this by looking at the many moving factors of your financial stability and overall credit history.
There are three keystones to touch on in order to qualify for a subprime car loan: ability, stability, and willingness.
- Ability refers to your ability to repay the auto loan. This means proving you have enough income and enough available monthly income to pay for the loan and vehicle expenses. Subprime lenders typically require a monthly minimum income of around $1,500 to $2,500 before taxes.
- Stability refers to your work history and living situations. Subprime lenders often require their borrowers to have lived at the same address for at least one year. They also typically require a consistent work history for the last three years, and that you’ve held your current job for around a year.
- Willingness refers to your willingness to pay, and it’s proven with a down payment. Down payments increase your odds of completing the loan, and in turn, increase your auto loan approval odds.
Meeting these qualifications is often more important than having a good credit score in a subprime lender’s eyes. Even if you believe your credit score is really bad, satisfying these requirements can tell the subprime lender you’re able and willing to take on a car loan.
Really Bad Credit Scores and Vehicle Financing
There are some circumstances where you may not qualify for subprime lending. For instance, a borrower with a repossession on their credit reports that’s less than a year old isn’t likely to get an auto loan approval. Most subprime lenders require that a repo be at least one year old before they can consider you for vehicle financing. Borrowers with multiple late payments on previous loans may struggle to get a subprime car loan as well.
For those with recent, serious delinquencies on their credit reports who can’t get an auto loan approval from a subprime lender, a buy here pay here (BHPH) dealership may be a solution.
These dealers are known for their lack of a credit check – which means your “really” bad credit doesn’t influence your auto loan eligibility. As a trade-off, you can expect higher interest rates and a large down payment requirement. Your car loan may not be reported either, since most lenders that skip the credit pull don’t report their loans or your on-time payments.
While a higher interest rate can be a deterrent for many borrowers, a BHPH dealership could be a simple and quick solution if you need a vehicle quickly with a very poor credit history.
Ready for a Car Loan?
Many people need vehicles for their daily life, and poor credit can make securing the things you need difficult. Here at Auto Credit Express, we know how tough it can be to find the resources you need with poor credit, so we’re here to help.
Thanks to our nationwide network of dealerships, we’ve been matching borrowers to dealers in their local areas that know how to help bad credit borrowers. Get started today by filling out our free auto loan request form. There’s never a cost or obligation, and we’ll get right to work looking for a dealership near you that’s signed up with subprime lenders.