When you have bad credit, the car buying process works differently than the traditional car buying and loan process. You may be wondering just what goes on that makes it the opposite of financing a car with good credit.

Finding Financing

The first step to any subprime financing situation is to know what you’re getting into. This means knowing where you stand as far as your credit, budget, and vehicle requirements are concerned. Once you're ready to move forward, you need to find a special finance dealer that can work with your particular credit situation.

Special finance dealers differ from other dealerships in that they also work with subprime lenders. These are indirect lenders, who work through dealers that have agreed to partner with them. These lenders allow their dealers to serve a wider range of consumers including those who have credit challenges. Because subprime lenders typically work through dealers and don’t offer direct loans, borrowers with bad credit will find it difficult to get pre-approved for a car loan before going to a dealership.

At the Dealership

at the dealership talking to car salesmanOnce you’ve found a dealer, it’s time to start the process of getting an auto loan. Many people think the process begins by selecting a vehicle, then negotiating the details. The traditional car buying process often works like this for people with good credit. For people with lower credit, usually a FICO score of 620 and below, the subprime lending process starts with the verification process.

For this, you’ll have to present the dealer with typical documents like license and insurance, and some additional ones: proof of income and residence, a working telephone in your name, and six to eight complete references. Next, the special finance manager will submit your loan application to one or more of their lenders.

Lenders will base their decision on a variety of factors including information from your credit report as well as your ability, stability, and willingness to pay back a loan. The additional documentation you’ve provided helps to show proof of your ability and stability. Approval results in a “payment call” where the lender provides details of your loan and any additional stipulations they may have to the dealer.

Now your dealer compiles a list of vehicles they have in stock that fit the lender’s requirements. Once they present you with your choices, the process wraps up like any loan. You can test drive and select the car that works for you, finish the paperwork, and take delivery.

Finding a Dealer

If you’re ready to get the car buying process started, but bad credit is holding you back, put Auto Credit Express to work for you! We can help turn you toward a special finance dealer in your area with lenders ready to take on your credit situation.

We work with an extensive, nationwide network of special finance dealers who have subprime lenders available to help people with many credit challenges like bad credit, no credit, bankruptcy and repossession. It’s simple to get the process started by filling out our no-obligation online auto loan request form today.