Can You Get a Real Car Loan With Bad Credit?
It is possible to get real auto credit with bad credit! If you think this statement is too good to be true, it may depend on your definition of a “real loan”.
The definition of the consumer of “real” loans
We are now entering the definition of a “real” loan. How do you define a real car loan? Often times when people think of a “real” loan, they think of a personal loan for which a lender approves them for a lump sum that can be used for any purpose. Personal loans can be very difficult to obtain and are usually unsecured – meaning there is no collateral – and can have extremely high interest rates.
In auto financing, the equivalent of this type of “real loan” would be a car loan from a direct lender. When you get a loan from a direct lender, such as a bank or checkout – you are given a check to be handed over to the dealership which can be used specifically for a vehicle. One key difference is that the loan is secured by the car you are purchasing. This means that you risk seeing lower interest rates than a personal loan because the lender has your car as collateral. It also means that the lender is listed on the title as the lien holder until you repay the loan.
The problem with the direct loan is that it is not easy to qualify in all situations. Like personal loans, direct auto loans are credit-based. The better your credit, the better your chances of qualifying for the direct loan. So where does this leave borrowers with bad credit or no credit? The answer is the indirect loan – which is just as “real” as any other loan.
Indirect Loans – As Real As Any Direct Loan
With indirect loans, you are working through a dealer, and the difference is, you don’t see the money. Nobody gives you a check. No lump sum is added to your bank account. What you get are the keys to your car.
In this situation, the dealership works with you on behalf of the lender. They collect your application, then all the necessary documents and documents, which are then submitted to a lender (or lenders) for approval. If your credit is in good condition, you usually have a wide range of options and are eligible for lower interest rates. You are also more likely to be approved by captive lenders such as BMW Financial Services, Toyota Financial Services, GM Financial, Ford Credit, or Hyundai Motor Financing.
With poor credit, however, the collateral lenders you have to work with won’t be so easy to spot. These lenders, called subprime lenders, only work through special finance brokers and may allow you to finance a new or used vehicle if you have bad credit. There are only certain lenders who work with borrowers who have less than perfect credit, and they have specific requirements that you must meet to qualify for a car loan.
Working with subprime lenders
Lenders who offer auto loans, including subprime lenders, generally judge your ability to qualify for an auto loan based on your self-improved FICO score. Borrowers who fall below a 669 on the FICO scoring model typically need a subprime lender who can look past a credit score to get a better picture of their overall credit situation. Some of the requirements of these lenders generally include, but are not limited to:
- A minimum income of $ 1,500 to $ 2,000 per month before taxes, from a single job
- Proof of income with recent computer generated check stub showing cumulative income for the year
- Proof of residence with utility bill in your name, at the address indicated on the application
- Proof of a working landline or cell phone – prepaid phones are not accepted
- A valid driver’s license
- A minimum down payment of $ 1,000 or 10% of the vehicle’s selling price, whichever is less
Not all lenders follow this list exactly, with some having different or even additional requirements. Whatever the details, it’s always a good idea to prepare for the process. Know where your credit is and have all the necessary documents at the start of the car buying process really helps.
Get off on the right foot
Because the lenders who offer subprime loans are not direct lenders, you can’t sit with them face to face or get a check from them – but they still offer real car loan solutions for people with disabilities. struggling with bad credit. Because they work indirectly through special finance dealers, they may not be as visible and you will need to know where to find the right dealer.
Here has Auto Express Credit, we know where you can go! We work with a nationwide network of special finance brokers who have the loan resources to help you when coping with bad credit. The process is free and without obligation, and you can get started now. Simply complete our easy online form auto loan application form, and we’ll get to work today to connect you with a reseller!