How to Get Approved for an Auto Loan with a Captive Finance Company with Bad Credit

Get Car Financing
Even with poor credit.

January 27, 2012

You can have poor credit and still be approved for an auto loan through a captive finance company. Here is how you do it.

Step 1: Choose a Car to Purchase

Captive finance companies were created by each automaker to keep money in house from start to finish. Since they are in-house finance companies, they can take on customers that normal financial institutions would not normally work with. The two key factors here are that you must plan to purchase a new car, and it will be a car that is chosen for you. This is because the in-house finance manager will usually call the captive finance company first and discuss your situation, your income, and other factors and they will then tell the finance manager how much they will finance. Indeed, if they decide to pick you up as a client, even if you have a poor credit score or bad credit, you will be told what you will do all the way through the process.

Step 2: Get Enough Money to Make a Sizable Contribution

While captive finance companies often facilitate new-car purchases, they often tell you that you will have to make a rather large upfront investment out of your own pocket. This is actually very fair because they want to make sure that you understand the commitment they are making to you, because of your poor credit, and they want to make sure that you have substantial equity in the vehicle so you won't walk away or try to walk away should things go bad. They may also make it a requirement that you set up an automatic payment program so that they are paid every month

Step 3: Build Relation

In the world of standard car loans, finance companies are governed by a clear set of rules. They know how much you have to make in order to grant a loan. There are guidelines about the amount of your debt to income that they will permit. There are guidelines about your FICO or loan score which is often the most important piece of information for them. There are also guidelines about your debt picture in general. Captive houses, on the other hand, can look around these barriers because they know they have the ultimate weapon in any disagreement: repossession. Yes, it's a nasty word and it is one that isn't bandied about and one that you should watch because it will just worsen your already poor credit. Repossession will also make it impossible to purchase a car for many years, so the captives know they have your car as collateral and they also know that this is a vehicle you want to keep, so the ball is in their court. Make sure you have a good relationship with the captive house.

Step 4: Get the Loan

Captive, in-house companies provide you with the money that an auto loan company cannot, because of the constraints under which they operate. They have to show a profit and they also have to ensure that any investments made will be paid back. Captives, on the other hand, provide the money that standard loan companies cannot, but you must understand that you have to work with them closely and that you have very little freedom in the choice of vehicle. It's often chosen for you so that the finance office can get you though the captive finance firm–GMAC or Ford Credit, for instance–and you must also come up with the down payment they say you need. Submit the necessary papers they require and you'll have your loan.

Free Credit Score

Get your free credit score now! Get a copy of your most recent credit score.

Get Your Free Score

Auto Insurance

Get competitive quotes on insurance in your area.

Vehicle Warranty

Protect your vehicle and you could save thousands on auto repairs.

Get a Free Quote

Need a Car Loan?

It only takes a minute.

Loan approval is not guaranteed and is subject to credit application and approval of the lender. Individual loan terms may vary. Use of this website constitutes acceptance of's Terms of Use, Disclaimer, Privacy Policy, and Cookie Policy.

Privacy Policy|Do Not Sell My Personal Information|Terms of Use|Cookie Policy|Disclaimer|
COPYRIGHT 1999-2020 MH Sub I, LLC dba