Basic Car Loan Requirements

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Content Manager

Bethany Hickey is a Content Manager and Writer for Auto Credit Express, CarsDirect, and many other automotive blogs. She's a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. 

, Content Manager - April 28, 2021

The requirements for a car loan can vary, but we can give you a good idea of the basics to help you prepare for that trip to the dealership. And if you’re a bad credit borrower, we have some requirements you’re likely to encounter if you apply for a subprime car loan, as well.

What Requirements Can I Expect?

Financing a vehicle at a dealership can be pretty streamlined if you’re prepared and know how it works. You can choose a car with a dealer first, then visit the dealership’s finance and insurance (F&I) department and apply for an auto loan there. It can be a one-stop-shop car buying experience if you’ve gathered everything you need ahead of time.

To apply for a car loan at a dealership, you need some documentation that proves you’re able to afford the loan amount you need to buy the vehicle. Here are some basic documents you can prepare ahead of time:

  • Your computer-generated check stubs from the last 30 days, if you have W-2 income
  • Two to three years of tax returns, if you have 1099 income
  • Proof of a residency, usually a recent utility bill does the trick
  • Proof of a working phone, proven with a recent phone bill
  • Proof of auto insurance, and you need full coverage when you’re financing
  • Valid driver’s license
  • Down payment, if you plan to put money down
  • Your trade-in, if you have one, and the documents needed to sell it

To finance a vehicle at a dealership, it’s pretty similar to a direct auto lender’s requirements – except you don’t typically meet with the lender themselves.

Instead, you talk to the F&I manager that’s on-site. You give them your information and documents and they send it along to their lending partners. When you apply for financing at a dealership, your application may get sent to a few lenders depending on how many they’re signed up with.

If you qualify, the lender tells the F&I what you’re eligible for. You complete the loan and purchase paperwork at the dealership, and then take delivery of the vehicle!

What About Bad Credit Car Loan Requirements?

To qualify for a traditional auto loan, you usually need good credit. Traditional lenders can have high credit score requirements, and borrowers that fall below the 660 mark can struggle to qualify. However, special finance dealerships that are signed up with subprime lenders can assist borrowers with credit challenges.

Applying for a subprime car loan starts with finding a special finance dealership. But instead of choosing a vehicle first, as many buyers do, you apply for the auto loan first so the lender can determine the maximum car payment you qualify for. This is called a payment call. Once that’s done, you choose a vehicle that fits your needs and the maximum car payment you’re eligible for based on your situation.

You may need a few more documents to apply for a subprime auto loan than what a traditional loan requires. Here are some common subprime car loan requirements at a special finance dealership:

  • Minimum monthly income of around $1,500 to $2,500, before taxes, and proven with check stubs or tax returns depending on your income type.
  • Down payment of at least $1,000 or 10% of the vehicle’s selling price. This requirement can also be fulfilled by trade-in equity, cash, or a combination of both.
  • Valid driver’s license
  • Proof of residency, proven with a recent utility bill or bank statement in your name
  • Proof of a working phone, proven with a recent phone bill in your name
  • A list of five to eight personal references
  • Consistent work history for the last three years
  • You’ve been employed at your current job for around six months to a year
  • Proof of full-coverage auto insurance

You may notice that many of the requirements for a subprime car loan are very similar to the requirements for a traditional auto loan. The biggest difference between subprime financing and traditional vehicle financing is that subprime lenders usually take a closer look at your overall financial stability. Since they don’t just rely on your credit score to see if you’re able to repay a loan, they take into account your work history and living stability as well.

Since subprime lenders consider your overall financial stability, they’re able to assist borrowers in many different credit circumstances such as bankruptcy, no credit, first-time car buyers, or those that have had credit bumps in the past.

Start the Search for a Dealership!

Being prepared is one of the most important parts of applying for a car loan. To avoid multiple trips to a dealership, organize your documents ahead of time and put them in one place so you can get in and out more quickly. Nobody wants to spend hours going back and forth between home and the dealership! And looking for the right dealer for your credit situation can be time-consuming, as well. It doesn’t have to be with CarsDirect on your side, though!

We want to help you skip the hassle of finding a dealership. Thanks to our nationwide network of special finance dealers, we’ve been matching bad credit borrowers to dealerships in their local area for over 20 years. To begin your car shopping journey with a dealer that knows how to handle credit challenges, fill out our free auto loan request form and we’ll get right to work.


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, Content Manager

Bethany Hickey is a Content Manager and Writer for Auto Credit Express, CarsDirect, and many other automotive blogs. She's a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. 

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