Borrowers with problem credit should be careful of anyone that promises to pre approve their car loan application
Of particular interest to car buyers with problem credit as well as a question we frequently get asked is whether we can offer them a pre-approval on a car loan.
Here at Auto Credit we can understand this concern because we’ve spent the past two decades helping thousands of car buyers searching for online auto loans find the right kinds of dealers for their best chances at auto loan approvals even though they have damaged credit.
As a result, we know quite a bit about the approval process for these kinds of buyers – which brings us to today’s topic: getting preapproved for a car loan with bad credit.
Auto loan preapprovals with questionable credit
From what we’ve witnessed over the past twenty years, there has always been great deal of deception and misinformation both in print advertising and on the web concerning car loans to credit challenged consumers. For example, here is a direct quote we recently saw on another auto loan web site:
“Regardless of your credit history, you can get approved for a low interest auto loan…. Comparing lenders will help you find the best rates.”
Whoever wrote this work of fiction has either never done this type of auto finance or, if they have, they’re trying to convince people to believe something that just isn’t true in order to get their credit information.
Here are some hard facts:
• There is no way any consumer with substandard FICO scores will get approved by any lender for a low interest auto loan.
• If an applicant’s credit report is really bad – such as a history of dismissed bankruptcies or multiple repossessions – there’s a good chance they’ll be unable to get approved for any kind of auto loan. It certainly won’t happen without a hefty down payment, and possibly not even then – at least from a reputable lender that reports both loans and payments to the credit bureaus.
• Comparing the rates and programs of the various high-risk auto lenders can be very difficult. Most only lend indirectly through franchised new car dealers. This means applicants typically don’t know the interest rate until the dealer receives the payment call from the lender.
• The lender the dealer picks (provided there is more than one approval) is typically chosen based on the overall terms (down payment, loan term, dealer acquisition fee and interest rate tier) of the credit decision, not necessarily just the interest rate.
This means that car buyers looking for a “bad credit instant decision” or “problem credit preapproval,” won’t find either because this just isn’t a part of the typical subprime auto loan process. The truth is that most lenders we’re familiar with never work directly with buyers. Even if a borrower could find one, it’s even more of a long shot that individual could find two in order to compare the rates and terms.
In our experience, anyone who tries to tell buyers otherwise is just promising something they cannot deliver in order to entice consumers to fill out their loan application.
The Bottom Line
Borrowers with credit issues should understand how the subprime auto loan process really works so they’ll know what to expect. Web sites that promise preapprovals are simply trolling for credit applications because in most cases this doesn’t represent a true offer of credit based on your credit score (how could it – you haven’t given them your personal information yet).
Something borrowers can believe: Auto Credit Express matches consumers, even those that believe their only option is a BHPH car loan, with dealers that can offer them their best opportunities for approved auto loans.
So if you’re ready to establish your car credit, you can begin now by filling out our online auto loan application.