Just because you have bad credit doesn't mean that you can't buy a car. With the right attitude and know-how, you can approach a subprime auto loan the right way and improve your chances of approval.

Tips to Improve Your Subprime Auto Loan Experience

Like most things in life, there is a right way and a wrong way to go about securing subprime auto financing. You only have a small window of time to make a good impression on the dealer, and there are a few things you can do to improve your chances of approval.

subprime auto loan

  • Know Your Credit
    Your credit score determines your creditworthiness, and you need to know it before starting the process. If you don't, it's possible that a shady dealer might try to take advantage of you. You should also be aware of what's on your credit reports. Reviewing them could alert you of any incorrect information or short-term credit fixes that can be made. Whether it was an unexpected event, the recession, or financial mismanagement that put your credit in the situation it is in, there is no use dwelling on the past. Your credit situation is what it is, and being realistic about it will only help your outlook.
  • Figure Out the Total Cost of Car Ownership
    Do not think in terms of monthly payments. Instead, consider the total cost of car ownership. You need to take a look at your financial situation, use your credit score to get an idea of what kind of interest rate you'll face, and then figure out a ballpark figure of what you can afford. Remember to factor in the costs of fuel, maintenance, and insurance.
  • Having a Down Payment
    Zero down financing seems like a dream scenario, but it's not realistic for many bad credit borrowers. The truth is, having a sizeable down payment will significantly improve your chances of securing approval. A dealer will take you much more seriously if you are willing to invest in your purchase. Not to mention, a down payment will: Lower the loan principal and therefore reduce your monthly payments, give you equity, and make it possible to shorten the loan term. Whether cash or trade in, a down payment of around 10-20% will work wonders for your subprime auto loan. Do all that you can to save up for one, even if that delays your purchase for a bit.
  • Having Your Documents Ready for the Dealer
    Dealers need to see a lot of documentation during the application process. Having it on hand during your first visit can speed up the process and impress them. No, it won't change your credit situation, but making their job easier will put you in a more favorable light. Bring your valid driver's license as proof of identity; a recent pay stub, bank statement, or last year's federal income tax form as proof of income; and a recent utility bill as proof of address. You'll also most likely be asked for a list of personal references. Have a list of about 4-6 people (names, addresses, phone numbers) that agree to vouch for you ready to go. Having these documents will make you seem organized and serious.

Securing a Loan

If you are sick of hearing the word "no," it's time to consider applying with Auto Credit Express. We've been helping people with less than perfect credit secure auto financing for almost 20 years. We'll get to work for you if you fill out our fast and secure online application. Start today!