When you have bad credit, you may think you’re out of luck in the car-buying world. But, have no fear, subprime is here! Subprime lenders specialize in helping many credit-challenged buyers get approved for auto financing. In order to finance a vehicle with bad credit, you should consider following our tips if you want to increase your chances of getting approved.
Tips for Getting the Car You Need with Bad Credit
Whether you’re buying a car for the first time, or purchasing a new vehicle after a total loss, buying a car takes patience. It’s a step-by-step process, and you shouldn’t skip any parts if you have bad credit and want to finance a vehicle. In order to increase your chances of getting approved, here are 10 tips you should consider:
- Check your credit – You should know where your credit score stands and know what’s on your credit reports. You can get a free copy of your credit reports every 12 months from each of the three major credit bureaus: Equifax, TransUnion, and Experian. Make sure the information is correct, and dispute any errors to the reporting credit bureau if not.
- Know what you can afford – There’s more to car buying and ownership than just the monthly payment. Make sure you take into account the interest rate, tax, title, and license fees, fuel, repairs, maintenance, and insurance expenses.
- Get all documents ready – Subprime lenders typically require proof of income, residency, and a working phone, and a list of references. Before you head to the dealership, make sure you have the documents you need for the lender, plus the registration, title, and payoff amount for your current vehicle if you plan on trading it in.
- Try and get pre-approved – If you have a solid relationship with a bank or credit union, see if you can get pre-approved for an auto loan with them before heading to a dealership. You may be able to qualify for a better interest rate that can help you save money.
- Research cars – What do you need out of your next vehicle? Consider who’s driving and what it’s going to be used for the most. If you have a family of five, for example, you might want to check out crossovers and SUVs rather than sedans.
- Know your budget – How much vehicle can you afford to finance? You can use online tools and calculators such as our Car Loan Estimator or Payment Calculator to get a rough estimate on the cost of an auto loan.
- Have a down payment ready – A down payment is generally required with a subprime auto loan. Although the amount you need varies by lender, you can typically expect a down payment requirement of $1,000 or 10 percent of the vehicle’s selling price, whichever is less. If you can put more down, we highly recommended you do. The bigger the down payment, the more affordable the car loan.
- Read the paperwork before signing – Make sure you understand all information on the buyer's order and loan contract and it's correct before signing and closing the deal.
- Beware of scams – If you’re buying a vehicle from a private party, the sale isn’t covered by the same protections as one from a licensed dealership. Be aware of car buying scams like curbstoning, and, if the vehicle is used, make sure you check its history report and have it inspected by a trusted mechanic.
- Keep up with the payment – Once you finalize the deal, make sure you keep up with the monthly payment. Financing a car with a subprime auto loan can only help your credit score improve if every payment is made on time. If not, your credit could end up in worse shape than before.
Stuck on Where to Start?
If you have all your documents ready, have a vehicle or two in mind, but don’t know where to start looking for financing, let Auto Credit Express help. We help credit-challenged car buyers by connecting them to a dealership with the lending resources they need. Our service is free and puts you under no obligation to buy anything. So, what are you waiting for? Get started right now by filling out our auto loan request form.