Bad credit or no credit? No problem! Start driving today! Many people have heard the words “bad credit,” but not everyone can understand the impact that credit problems can have when it comes to buying a car. Credit difficulties can hurt your chance of getting an auto loan because not all lenders can work with people with bad credit. There is one type of lender specifically dedicated to helping consumers with credit problems obtain financing: subprime lenders.
These lenders work through special financial dealerships, providing subprime auto loans to consumers who have been turned down by traditional lenders and need a second chance. An auto loan with a subprime lender not only offers a way to obtain financing, it can also help you improve your credit score. When it comes to less than perfect credit, you want to be fully prepared for the auto loan process before you begin, and Cars for your help can help. Get off to a good start and let us find you a special financial agent in your area.
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What is a Bad Credit Auto Loan?
A bad credit auto loan, also called a subprime auto loan, is a type of financing offered by lenders who know how much a loan can improve the quality of life for a consumer with credit problems. Sub-prime loans are great to manage again if you have less than perfect credit or no history. However, if you don’t know where to look, it can be difficult to find a lender for this type of loan.
The subprime loans are only offered by third parties, and they work exclusively through special financial dealers. However, not all dealerships have a special finance department, so you can’t just go to just any dealership and get a car loan as a borrower who is struggling with credit.
When you visit the right dealership and work with a subprime lender, you have the advantage of having a lender who really sees your whole situation, not just a credit score. These lenders look at many factors other than your credit in order to assess whether you qualify for an auto loan.
Before you go to a dealer and ask for a loan, it is important to know what your credit is and not base all your knowledge of your credit situation on what the lender says. Two of the most important things you can do for yourself are to get your credit score and keep track of what is on your credit reports.
You can get a free copy of your credit reports from each of the national credit bureaus once every 12 months, and there are several ways to find your credit score. Knowing your FICO credit score, which is the version most used by lenders, can help you research the interest rates and loan terms that are generally available to people in your credit score range. In this way, you can become familiar with your credit situation and you will know what offers are fair and appropriate. Also, one of the advantages of a bad credit auto loan is that it can help you improve your credit score so that you can qualify for an even better loan in the future.
Bad Credit Auto Loan Requirements
When you have bad credit, getting a car loan is not as simple as choosing a new car, applying, and signing the papers. Getting the financing you need while struggling with bad credit requires additional steps and documentation.
To be considered for financing, it’s a good idea to know your credit situation and prepare a budget before heading to a dealer. Your budget is essential to the loan experience. If you don’t have a fixed price range in mind, you could end up financing a more expensive vehicle than you can afford.
You must also be prepared to meet the requirements of the subprime lender. The details vary from lender to lender, but they generally ask you to provide information that shows that you have the ability, stability, and willingness to obtain a car loan. You must also meet the basics, such as being a current resident of the United States, be at least 18 years old, and have a valid driver’s license. Bringing all your documentation to the dealership on your first visit can save you time and the hassle of having to make multiple trips.
Things to bring on your first visit to the Bad credit used car lots dealerships no credit check near me
- Proof of Income: Your most recent check is required showing your annual income. Minimum income requirements generally range from $ 1,500 to $ 2,000 a month, before taxes, from a single source. This also serves as proof of employment. Lenders generally require that you have been at your current job for at least one year, or six months if you have a three-year work history with no major gaps in employment.
- Proof of Residency – Prove your residency by bringing a utility bill or bank statement in your name that has been mailed to your address. As a sign of stability, you may need at least a year in your current residence or a three-year history in the same area.
- Testing a working phone: Typically a landline or cell phone is required by contract, although prepaid phones will not be considered. Bring a recent phone bill with your name and address to serve as proof.
- Personal References: Sub-prime lenders also require a list of five to eight personal references, complete with names, addresses, phone numbers, and email addresses. Family members are preferred, but duplicate addresses are not allowed.
Keep in mind that you must also meet a number of financial requirements. Having a necessary minimum income is a good place to start, but without sufficient disposable income, lenders may doubt your ability to successfully repay your auto loan.