Basic Requirements for Subprime Car Loans

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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, 2020

If you have bad credit, you can still get an auto loan through a subprime lender. We’ve outlined the basic car loan requirements of subprime lenders, and what you can do to prepare for your trip to the dealer.

Subprime Lenders and Car Loan Requirements

As a bad credit borrower, you’re going to need some items to prove to a subprime lender that you can successfully complete a car loan. Since bad credit lenders don’t solely rely on your credit score during the approval process, expect to bring some documents to the dealership.

Keep in mind that every lender is going to differ in what they need in order to make a loan decision, and your personal situation may require additional items.

Basic Requirements of Subprime Lenders

Most subprime lenders require similar items to determine your eligibility for an auto loan. Here's a breakdown of basic subprime lender requirements and what you need to bring in for proof:

Income Requirements

Bad credit lenders typically require their borrowers to have a minimum gross monthly income of at least $1,500 to $2,000. To meet this requirement, the income needs to come from one source. Income must be proven with your latest computer-generated paycheck stub with your year-to-date income listed.

If you’re a worker that relies heavily on tips, unless those tips are reported, it won’t count toward the income requirement. Lenders can only look at your reported income when making a loan decision. If you rely heavily on tips, lenders may accept multiple years of tax returns as proof of income if they show them.

If you work two jobs, only one income source counts toward the minimum income requirement. However, other sources of income, provided they’re steady and last the loan term, can be used to lower your debt to income (DTI) ratio, which compares how much you earn each month to how much you pay in bills each month.


You can prove your identity with a valid driver’s license or state-issued photo ID. If either is suspended, revoked, or expired, a subprime lender won’t accept it. It must also have your current address.

While some lenders may not require you to have a driver’s license to finance a vehicle, you need one to be able to test drive a car, and eventually drive it off the lot.

Working Phone

Subprime lenders require that you have either a contract cell phone or landline phone. To prove you have a working phone, bring a recent phone bill in your name with your current address listed.

If you have a prepaid cell phone, a subprime lender typically won’t accept this.


Proof of residence is a requirement from subprime lenders. This can be easily proven with a recent utility bill in your name with the address listed. Additionally, you can also prove your residence with bank statements showing your current address.

Down Payment

Nearly all subprime lenders are going to need a down payment for you to be considered for approval. Typically, the down payment needs to be at least $1,000 or 10% of the vehicle’s selling price, sometimes whichever is less.

You can pay with cash or use a trade-in with equity to help meet this requirement – or both!

Personal References

If you’re approved for financing, your lender is likely to require a list of around five to eight personal references. These people can be family members, friends, coworkers – nearly anyone who doesn’t live at your current address.

The references need to have complete contact information, so to help you prepare, ask some people ahead of time for permission to list them as a reference.

Additional Items and Considerations

Your lender may want additional documents before you can be considered for an auto loan. To help speed up the process, be open and honest with the special finance manager about your situation.

If you want to use your secondary income to help bring your DTI ratio down, you need to bring in proof of income for that, as well. For example, if you’re receiving alimony, you must provide proof that those payments will continue for the duration of the loan term.

If you’ve been recently discharged from a bankruptcy, and the discharge doesn’t appear on your credit reports yet, have your discharge papers handy.

Trading in your old car to help with the down payment requirement? Be sure to have the title – and if you still owe on it, contact your lender for a 10-day payoff so you know the balance before you trade it into the dealer.

Additionally, when you finance another vehicle, be ready to pay for registration, auto insurance, and license plates. You need proof of insurance before you can drive the car off the dealership lot.

Finding a Subprime Lender

While subprime financing is certainly more available than it has ever been, it can still be hard to tell which dealers work with subprime lenders. We want to help with that!

At CarsDirect, we know which ones have special finance departments and we can connect you to one in your area. To get started, simply fill out our free auto loan request form. We’ll match you to a local dealership that works with bad credit lenders and help get you into your next car loan.


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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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