When you have bad credit, it can impact every part of your life. One area that can be hit hard is buying big ticket items that normally require financing—homes, appliances, furniture and cars. Getting an auto loan, in particular, can be difficult because subprime financing has a lot of requirements and stipulations involved.

The Need for Subprime and Personal Requirements

If you need to buy a vehicle, it’s important to know your credit situation before you go to the dealership. This is because going into the car buying process as an informed consumer can help you get the best deal for your particular situation.

Consumers with a credit score of somewhere around 640 or below who need subprime financing will have to provide the dealer with a number of documents. These include proof of income, residence and a working phone in your name, as well as a list of personal references. You can also expect both down payment and/or cosigner requirements, as well as higher interest rates.

Car Choice Matters

couple looking at a vehicle, car shoppingYou might think it would be easier to get a small loan on an older car, but that is not always the case. Subprime lenders typically have certain vehicle requirements, including limits on age and mileage.

Although it can vary, subprime lenders usually limit you to vehicles with no more than 100,000 miles that are 10 years old or less. This is done in your best interest. Often, people with credit issues also have limited budgets and may not be able to afford the major repairs older vehicles sometimes need.

Another thing subprime lenders look at is a vehicle’s actual cash value. This is because they don't want you paying a hefty premium over a vehicle's true retail value—a situation that would cost you even more in interest charges over the life of a loan.

In fact, newer models (and cars with fewer miles) often qualify for longer loan terms and lower interest rates than older, higher mileage vehicles. This is important because a longer loan term may mean more affordable monthly payments, although you will end up paying more in interest charges overall. A good tip for subprime borrowers is to decide on a budget for your car, pick the shortest loan term possible and find a vehicle that fits within that budget.

Finding Financing First

People who need a bad credit auto loan often find it helpful to find financing first. This is because subprime lenders will budget you for a payment, rather than approve you for a particular car. Not only that, but it can be tougher for credit-challenged buyers to get a loan because not every car dealer offers special financing. No need to worry though, it may be easier than you think to find a bad credit car loan.

Auto Credit Express can connect you to a local special finance dealer who has the lending resources available to assist with many types of credit challenges. Don’t continue to suffer through your credit problems if you need a vehicle, let us help you get started today. Simply fill out our online auto loan request form to take the first step now!