A three-digit number can mean the difference between an auto loan approval and a denial: your credit score. When you apply for a car loan most lenders pull it up and if it doesn’t meet their standards, you may be out of luck. But there are lenders willing to look past a worse-for-wear credit score if you can meet their other requirements.

Bad Credit and Auto Loan Approval

When it comes to your credit score, many traditional auto lenders hold it to a high standard. If your credit rating isn’t great, or is below 660, you may run into issues getting approved for vehicle financing.

A good credit score is an indicator of your creditworthiness – your ability to repay borrowed money. A bad credit score can give the impression that you’ve had issues repaying your obligations on time or at all, which makes a lender wary to approve you.

However, this also depends on what caused your lower credit score. If your credit score is poor because you’re a new borrower – someone without a credit history – lenders may be more understanding of your situation. This is especially true if you’re in a stable employment situation and meet other loan requirements, which vary greatly depending on the lender you’re working with.

When Traditional Auto Lenders Can’t Help

Even if you’ve proven your income and have a down payment, a traditional auto lender may still not approve you for a loan when you have bad credit. If you’ve tried applying for a car loan with multiple lenders and keep getting turned away because of a poor credit score, then subprime financing may be your next step to getting a vehicle.

Subprime financing is designed for borrowers with credit issues. If you can prove that you have a stable income, solid employment history, and come into the process with a down payment, then you may qualify for a subprime car loan.

The biggest difference between subprime lenders and many traditional lenders is how you go about applying with them. Traditional lenders are direct lenders, and you can go into a bank or credit union and talk to them and conduct all financing paperwork in person. But with subprime financing, you need to find a special financing dealership that’s signed up with lenders that can help bad credit borrowers.

The Subprime Financing Process

Most dealerships are signed up with multiple third-party lenders, but not all dealers have connections with subprime lenders. Those that do are special finance dealerships.

To apply for a subprime car loan, you apply for financing through the dealership’s special finance department with the finance manager. They send your information and documents along to their lending partner(s).

If you qualify, the lender sends back your loan specifications and the highest monthly payment you qualify for. Once you have the loan squared away, you shop for a vehicle with the dealer.

In a way, this process is somewhat backward compared to traditional auto lending. But since subprime lenders assist borrowers with tough credit situations, they first evaluate your personal situation to determine what you qualify for.

Get Connected to a Dealership

If you’re not sure where to start looking for a dealership that’s able to assist bad credit borrowers, let Auto Credit Express be your guide. Over the last two decades, we’ve amassed a nationwide network of dealers with bad credit lending resources and we want to look for one in your local area.

There’s never a cost or obligation to get matched to a dealership, so get started right now with our free auto loan request form.