One of the questions that we get at Auto Credit Express comes from customers who have gotten a regular car loan in the past and don't understand the special finance process…

The bank determines your car budget

Guidelines for a bad credit auto loan are much stricter than for a regular car loan. When you submit a credit application, the bank looks very closely at your income and expenses. In fact, the bank requires you to prove your income with pay stubs that show year to date income. You may also be required to prove job tenure with a W-2 from a prior tax year.

Additional income such as child support or disability needs to be verified with court documents, determination letters and bank statements.

Once the bank determines your income relative to your monthly debts, it factors in such things as utility payments and car insurance and comes up with a payment that it believes you can afford.

The approval process

If you are approved, the bank will then place you in one of their tiered programs based on your credit score and credit history. This program will dictate the interest rate, contract term and down payment requirements. This information will then be sent to the dealer.

The inventory process

Once the special finance department receives the loan information, the finance manager will determine which cars in inventory fit the approval requirements. With most banks, the newer the car and the lower the mileage the longer the loan term allowed.

Understanding the process

Most customers that have not financed a car with a subprime lender choose a car based on what they like – color, model or type. It could be a 5 year old sport utility vehicle with 70,000 miles on the odometer. Even though this vehicle is clean and drives nicely, the interest will be higher due to its age, and a service contract (which you'll want, especially for an SUV) will also be more expensive. In addition, the term may also be shorter due to the mileage. In other words, it may look nice, but it also may not fit the payment call.

The Bottom Line

By understanding the buying process, you avoid being disappointed by looking at the wrong kind of car. Remember, the object is to get your credit back on track, not to get your dream car. To better understand the process and for more answers, go to Our website has auto loan calculators to help you determine your budget as well as a loan resource center that can help with your questions. If you need additional assistance, our toll free number is listed at the bottom of every page. Here at Auto Credit Express, we are here to help you get back “on the road” to better credit.