Basic Car Loan Requirements

Get Car Financing
Even with poor credit.

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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 16, 2019

If you need auto financing, the conditions you have to meet depend on whether or not you need a bad credit car loan. Typically, it’s easier to get a loan when you have good credit. This isn't to say you can’t get an auto loan with bad credit – far from it. Lenders just need you to meet a few basic car loan requirements first.

Requirements Vary By Credit Situation

With good credit – credit scores above 660 – you’re considered a low-risk borrower, and lenders aren’t as concerned with certain details. This is because borrowers with good credit have reported histories that already prove they’re responsible with credit.

Bad credit borrowers – credit scores below 600 – however, have credit reports that show either a spotty history of late or missing payments, or not much credit history at all. Therefore, lenders require more information before approving them for a loan.

Basic Bad Credit Car Loan Requirements

The items lenders require vary, but the basic car loan requirements tend to stay the same when you’re a bad credit borrower. Lenders that work with people in challenging credit situations are called subprime lenders. They know that it’s important to look at other factors in addition to credit scores to approve people with less than perfect credit.

The auto loan requirements that subprime lenders look for are:

  • Proof of income – Lenders need to see that you have steady, taxable income in the form of your most recent computer-generated check stub showing year-to-date income. For bad credit borrowers, lenders usually require a minimum income of $1,500 to $2,000 a month before taxes from a single job.
  • Proof of residence – A current utility bill in your name at the address listed on your application is typically sufficient for this.
  • Proof of identity – A valid driver’s license or state-issued photo ID is required. Even though not every lender requires a borrower to have a valid driver’s license for proof of identification, you do need one to register and drive off in a vehicle.
  • Proof of a working telephone – Some lenders have a saying: “no phone, no loan.” This may seem harsh, but lenders have to be able to contact you. A bill for a landline or contract cell phone in your name at the address listed on the application is required. Prepaid phones don’t count.
  • List of personal references – Lenders typically require a list of five to eight personal references, complete with names, addresses, phone numbers, and email addresses. Not all lenders contact your references, but require them to be on file, in case they need to verify information or can’t contact you.
  • Down payment – Bad credit lender’s typically require a minimum down payment of at least $1,000 or 10% of the car’s selling price, whichever is less. Keep in mind this is just a minimum guideline, and your down payment requirement varies based on your credit, the vehicle you’re financing, the lender you’re working with, and more.

Whether you have good or bad credit, there are additional things that you should keep in mind when you’re financing a car. Items like tax, title, and license fees, dealer documentation fees, interest rates, and loan terms all impact the overall cost of financing.

You also need to keep in mind things like fuel efficiency, auto insurance, and maintenance. The cost of ownership after financing should be a deciding factor when you’re shopping for a vehicle.

Finding the Next Step

Now that you know the basic car loan requirements that need to be met for financing, you need to find a lender that can help you get the loan you’re looking for.

As we mentioned earlier, not all lenders work with people that have less than perfect credit. Subprime lenders that do only work through special finance dealerships.

Special finance dealers aren’t always easy to distinguish from traditional dealerships, and that’s where we can help. At CarsDirect, we work with a nationwide network of special finance dealers that have the lenders you need.

We want to help you get connected to a local dealership. Just fill out our hassle-free, no-obligation auto loan request form, and we’ll get to work matching you to a dealer in your area.

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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.


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