Can I Get Pre-Approved for a Car Loan With Bad Credit?

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.


, - May 25, 2020

An auto loan pre-approval is a good way to get the vehicle financing you need. Generally, the lenders that offer these prefer to work with people that have good credit, but you may be able to get approved with less than perfect credit in some cases. Let's look at what a direct lender uses to determine approvals, and the alternatives you have.

Direct Car Loans

What most people think of as a "pre-approval" is actually a direct loan that typically comes from a bank, credit union, or online lender. Loans from direct lenders can give you a good deal of negotiating power when you're working with a dealership because you already have the money in hand.

Since you already know how much you can spend and what the repayment terms are, you're free to pick out a car, sign the sales contract, and take delivery. If you don't have a check, the dealer contacts the lender to cut a check directly to them, you sign your paperwork, and take delivery of your vehicle.

The trouble with these kinds of loans is that they're typically reserved for people with good credit. If you're struggling with credit issues, it can be more difficult to get a loan through a direct lender.

You may have your best opportunity through a credit union. Credit unions are typically more lenient if you're a member in good standing. Plus, they aren't for-profit organizations, which means they can pass any saving on to customers.

Alternatives to Direct Lending

However, if your credit is standing in the way of getting a direct loan, you may not be out of luck. Even though a pre-approval is a quick and easy way of getting the auto loan you're looking for, it's far from the only way to get financed.

One way to get a loan can be through a buy here pay here (BHPH) dealership. These dealers are the lenders, offer in-house financing, and don't rely on third-party lenders for approval. BHPH dealerships only sell used cars, but they can be a good option if you need a vehicle quickly.

Typically, BHPH dealers rely on your income and a down payment to get you approved. Many of them don't check your credit before offering you financing. However, just because they don't check your credit doesn't mean a loan activity won't show up on your credit reports. BHPH lots aren't likely to report timely payments to the credit bureaus, but late or missing payments are likely to be, which can bring down your credit score.

Another option is to work with a subprime lender that offers loans through a special finance dealership. These lenders are probably going to be your best bet when it comes to getting financed. Even though they check your credit, they don't rely on your credit score alone to make lending decisions.

Instead, they base approval on a few factors in addition to your credit score. These factors, such as your income, employment, residence stability, and willingness to make a down payment, help these lenders evaluate if you have the ability to complete an auto loan.

Applying With a Subprime Lender With Bad Credit

Not all lenders work with bad credit borrowers, and not all dealers have a special finance department that’s teamed up with these lenders. If this seems like the kind of lender you need, be aware that you have to meet a number of requirements in order to be considered for a loan.

These items help a lender when they're considering you for financing. The details may vary, but most subprime lenders list the following requirements you have to meet to be considered for an car loan:

  • A minimum income
  • Proof of income and employment, verified with a computer-generated check stub
  • Proof of residency, verified with a current utility bill in your name
  • Proof of a working phone, verified with a bill for a landline or contract cell phone in your name
  • A valid driver's license
  • A down payment
  • A list of personal references

Once you assemble the documents, you can find a dealership that works with the right kind of lenders for your situation, and that's where we can help.

Find a Dealership to Work With

Here at CarsDirect, we have a nationwide network of special finance dealers that are connected with the subprime lenders you need if you're struggling with credit troubles. To get matched to a dealership near you, fill out our free auto loan request form and we'll get to work for you.

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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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