Buying a Car with Bad Credit

Get Car Financing
Even with poor credit.

By

Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.


, - January 17, 2019

You don’t need perfect credit to get a car loan. In fact, there are many lenders out there who work with credit-challenged car buyers. But which type of lender do you go to? It all depends on what you’re looking for, and what you can qualify for.

Subprime Lenders vs. BHPH Dealers

When you have bad credit, there are two types of lenders that offer car loans: subprime lenders who work with special finance dealerships, or buy here pay here (BHPH) dealers who are also lenders.

With subprime lenders, you visit a special finance dealership and go through the car buying process. But, the requirements to get approved for a subprime car loan differ because of your credit score. They still look at your score, but they also have additional requirements in order to approve you for financing. These include:

  • Proof of income and employment
  • Proof of residency
  • Proof of a working phone
  • A down payment
  • List of personal references

Depending on the lender and your situation, you may need a cosigner. Even if a cosigner isn’t required, it’s a good idea to have one ready, because a cosigner can improve your approval odds, and might help you qualify you for a lower interest rate on your auto loan.

BHPH dealers lend in-house, meaning they can sell you the vehicle and finance your car loan all in one place – sometimes in the same day. Just like subprime lenders, you need to prove that you have a steady income, and you must have a down payment. You may also have to make weekly or bi-weekly payments at the dealership. What makes BHPH dealers attractive is that they don’t run credit checks, meaning your credit score and history don’t affect your approval odds.

Should I Use a BHPH Dealer?

If a BHPH dealer sounds too good to be true, you’re right. There’s always a catch with these types of dealerships. For one thing, because they don’t run credit checks, they typically don’t report loans or on-time payments to the credit bureaus – meaning your credit score isn’t going to improve over time. They do, however, report missed payments.

In addition, the vehicle selection is typically limited to older cars with high mileage. That doesn’t mean they’re in bad shape, but you should be cautious, request a vehicle history report, and have it inspected by a mechanic before signing any paperwork. BHPH dealers are great if you need a car fast, but if building your credit score is a goal, you may want to avoid these lots.

The Bottom Line

You can still get auto financing with bad credit. The trick is to find the right dealership and lender to work with. It’s not always easy finding these types of dealers, and that’s why CarsDirect wants to help you out. We work with dealerships all around the country that specialize in helping buyers with imperfect credit. We'll work to match you with a dealer in your area after you submit our online car loan request form.

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.


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