Credit amnesty is another term for bad credit forgiveness, and credit amnesty programs are designed to help people who are struggling with credit get an auto loan. Not every dealership offers credit amnesty programs, so how do you find them? We can help you find one near you, but first, let’s explain the different types of dealers you could work with.
Types of Dealerships to Work With
Even if you have bad credit, the first thing you should do is try for pre-approval with your bank or credit union. You may be surprised by what your approval odds are. Even if they turn you down, at least you know you need to look elsewhere for financing.
When deciding which type of dealership offering credit amnesty programs you should work with, you have two options:
- Buy here pay here dealerships – Also called tote the note dealers, buy here pay here (BHPH) dealerships finance loans in-house. This means you can buy a vehicle and get financed all in one place. These dealers offer credit amnesty in the truest sense, as most of them don't even run credit checks – so they won't even care what’s listed on your credit reports. Instead, they base loan approvals on your income. The downside is that they may not report your loan or on-time payments to the credit bureaus. If credit building is a must for you, you're going to want to ask about their reporting practices beforehand.
- Special finance dealerships – These dealerships work with subprime lenders. Subprime lenders specialize in bad credit car financing, and tailor auto loans to those looking for credit amnesty. They run credit checks, but also base approvals on additional factors such as income and residence stability, to name a few. The best part about financing through a subprime lender is that you get a chance to build your credit over time since they report loans and timely payments to the credit bureaus.
What it Takes to Get a Bad Credit Auto Loan
You don’t need great credit to get approved for a bad credit car loan, so what do you need? It depends. The specifics vary depending on where you go to get financed.
While subprime lenders and BHPH dealers typically offer credit amnesty programs, they have requirements that need to be met. Both usually require you to show proof of income and make a down payment, while subprime lenders ask for more documentation and BHPH dealerships ask for larger down payments.
Typically, subprime lenders ask that you bring in proof of income (a recent pay stub), proof of residency (a recent utility bill), proof of a working phone (a recent phone bill), and a list of five to eight personal references. Depending on the subprime lender you’re working with, they may even ask that you have a cosigner or co-borrower.
BHPH dealers, on the other hand, base approvals on your income. They generally don’t ask for extra documentation, but they do ask that you make a down payment. It's hard to put an exact amount on what they're looking for, as the money down requirement often depends on the price of the vehicle you choose.
Ready to Find a Dealership?
When you’re ready to find a dealership to work with, whether you're looking for a credit amnesty program or not, we’ve got you covered. Auto Credit Express has been helping bad credit consumers find financing for over 20 years, and we want to get you started on your auto financing journey. All you have to do is fill out our free and easy car loan request form, and we’ll get right to work matching you to a local dealer.