Questionable’s definition means that something’s quality is up for debate. If a lender says that your credit score is questionable, it’s likely that they mean it’s poor, or at the very least, they’re hesitant to approve you for vehicle financing. Here’s what most lenders consider questionable credit, and what auto loan options you may have.
Questionable Credit and Auto Lenders
Many auto lenders may consider questionable credit as a borrower with a credit score below 660. The credit score tiers as sorted by Experian the national credit bureau, are:
- Super prime: 850 to 781
- Prime: 780 to 661
- Nonprime: 660 to 601
- Subprime: 600 to 501
- Deep subprime: 500 to 300
The nonprime credit tiers and below is when you start to get into bad credit territory and may struggle to meet the credit score requirements of traditional auto lenders.
This is because lenders are looking at your creditworthiness – your perceived ability to repay loans based on the information in your credit reports. Besides your actual credit score, there may be situations where the items in your credit reports are what's making a lender question whether you're a good candidate for an auto loan. These can include:
- A past or active bankruptcy
- A past or recent vehicle repossession
- Recent missed/late payments
- High credit card balances
- No credit history
There are ways to get into an auto loan with questionable credit. Your options can change depending on what’s making your credit history questionable, though.
Questionable Credit Auto Loans
If your credit score is less than stellar, it may be time to look at these two lending options:
- Subprime financing – Done through special finance dealerships by third-party subprime lenders. These lenders can often assist with many unique credit situations, provided you can meet their requirements. A great option for new borrowers with thin files, situational bad credit, or consumers with older negative marks.
- In-house financing – May not require a credit check, and is done through buy here pay here (BHPH) dealers. Typically, your income and down payment amount are the most important parts of eligibility. Auto loans without a credit check may not allow for credit repair and may come with a higher-than-average interest rate.
Both of these car loan options are typically available to borrowers with credit challenges. However, if you have more recent, serious delinquencies on your credit reports, a BHPH dealer may be for you. Most traditional and subprime lenders typically don’t approve financing for borrowers with a dismissed bankruptcy, a repossession less than a year old, or borrowers with multiple, recent missed/late payments.
Requirements of Bad Credit Car Loans
In many cases, your income and down payment size are the biggest factors in your overall eligibility for bad credit auto loans. Expect to need:
- 30 days of recent computer-generated check stubs to prove you have around $1,500 to $2,500 of monthly gross income. Borrowers without W-2 income may need two to three years of professionally prepared tax returns.
- A down payment of at least $1,000 or 10% of the vehicle’s selling price. BHPH dealers may require up to 20% of the car’s selling price.
- Proof of residency in the form of a recent utility bill in your name.
- Proof of a working phone (no prepaid phones), proven with a recent phone bill in your name.
- A list of five to eight personal references with name, phone number, and address.
- Valid driver’s license with the correct address, can’t be revoked, expired, or suspended.
Depending on your individual situation, you may need fewer or more items to apply for a bad credit auto loan. However, preparing these documents before you head to a dealership can speed up the process!
Ready to Get on the Road?
With questionable credit, finding a dealership that’s able to assist you with an auto loan is easier said than done. Here at Auto Credit Express, we want to get that done for you with our coast-to-coast network of special finance dealerships.
Complete our free auto loan request form and we’ll get right to work looking for a dealer in your local area that can assist with many tough credit situations.