Bad Credit Car Loans From Direct Lenders

Get Car Financing
Even with poor credit.

By

Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


, - December 23, 2020

Direct auto lenders are those at banks, credit unions, or online lenders. They're also known as traditional lenders, and are the most commonly thought of type when people need financing. Direct lenders may not be the first option to consider if you're struggling with bad credit, though.

Direct Lenders Role in Car Loans

Getting a direct car loan from a bank or credit union is known as a pre-approval. When you're pre-approved, you're issued a loan and either cut a check or the dealer is paid directly. Then, you repay your loan to the lender. This essentially turns you into a cash buyer, allowing you to go to any dealership you choose to purchase a vehicle.

These loans generally have lower interest rates since they're given to people with good credit. When you see the "great low rates" advertised in loan commercials, there are some stipulations that apply. One of them is usually a minimum credit score requirement, which means that poor credit borrowers may have trouble qualifying.

Direct lenders traditionally only work with borrowers who have good credit scores. Some big banks may only finance people who have excellent credit scores – those in the very top tier of the crediting scoring models. If you're a member in good standing at a credit union, you may have an easier time getting financing there than at a bank if your credit is OK, but not great. Credit unions are member-owned, and can typically pass these saving on to their members.

Direct Lenders vs. Indirect Lenders

Direct lenders are called direct because you go right to the financing source, and get your loan from them in person. Indirect loans are those that you get from a third-party lender, and you don't actually meet with them. In the case of an auto loan, the finance manager at the dealer acts as the liaison between you and the lender.

Additionally, where you can choose any car within your pre-approval limit because you already know your spending cap with a direct auto loan, the process is a bit different with an indirect loan.

If you're working with an indirect lender through a dealership, the finance manager gets an approval from the lender, called a payment call. This lets them know what your maximum monthly payment can be. Then, the dealer chooses a selection of vehicles from their inventory that fit the budget, and you select from those.

Subprime Auto Lenders for Bad Credit

Subprime lenders that assist bad credit borrowers are almost always indirect lenders. They're typically signed up with special finance dealerships, and have a number of requirements you have to meet in order to qualify for a car loan. They know that you're more than a credit score and base loans on your overall financial and credit picture.

In order to get approved, you need to meet several guidelines regarding your ability to repay a loan and how stable your income and finances are. When you need subprime financing, you also usually have to have a down payment.

Let CarsDirect Be Your Guide

If you're struggling with bad credit but you need an auto loan, a direct may not be for you. However, working with a subprime lender through a special finance dealer could be your key to the vehicle you need.

It can be hard to determine which dealerships are signed up with the lenders you need. Rather than searching all over looking for someone to get you a car loan, let us point the way. Here at CarsDirect, we’ve gathered a nationwide network of special finance dealers that can help. Take the hassle out of your search by filling out our fast, free, and no-obligation auto loan request form today.

Free Credit Score

Get your free credit score now! Get a copy of your most recent credit score.

Get Your Free Score

Auto Insurance

Get competitive quotes on insurance in your area.

Vehicle Warranty

Protect your vehicle and you could save thousands on auto repairs.

Get a Free Quote

Need a Car Loan?

It only takes a minute.

Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


Search New Cars by Loan Payment »

View estimated loan payments based on local rebates and financing offers.

Loan approval is not guaranteed and is subject to credit application and approval of the lender. Individual loan terms may vary. Use of this website constitutes acceptance of CarsDirect.com's Terms of Use, Disclaimer, Privacy Policy, and Cookie Policy.

Privacy Policy|Do Not Sell My Personal Information|Terms of Use|Cookie Policy|Disclaimer|
COPYRIGHT 1999-2021 MH Sub I, LLC dba CarsDirect.com