Minimum Requirements for Bad Credit Car Loans

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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.


, - September 10, 2020

There are rules to just about everything in life – whether they're self-imposed, lender specific, or mandated by law – and bad credit car loans are no exception. Willy-nilly isn't the way to go when it comes to auto loans, and we've got the inside scoop on which requirements you need to face when you have poor credit.

Why Are There Lender Requirements?

Rules are put in place to create a status quo, and the same goes for the requirements of a car loan. The conditions of an auto loan are there to ensure fair deals for the widest group of consumers possible.

While we didn't make the rules that come with the territory, we're here to help you navigate the complex world of bad credit car loans known as automotive special finance. With minimum requirements for credit scores, income, employment, living situations, vehicle age and mileage, insurance, loan amount, and more, how do you know where to start? That's where we come in!

Car Loan Requirements to Consider

When you decide to finance a car with a bad credit auto loan, your lender's specific requirements may vary. However, subprime lenders typically look at your:

  • Minimum income – Most lenders need to see that you make around $1,500 to $2,500 a month before taxes.
  • Minimum employment – Many lenders require you to have been on your current job for at least six months to one year. A three-year work history with no gaps longer than 30 days between jobs may also be needed.
  • Minimum down payment – Specific amounts can vary widely, but bad credit lenders often require a down payment of at least $1,000 or 10% of a vehicle's selling price.
  • Minimum loan amount – Subprime lenders generally don't offer loans for under $5,000. The car you choose to purchase doesn't have to cost that much, but the overall loan total after taxes, fees, and surcharges usually must be over that amount.
  • Vehicle age limit – Lenders that work with poor credit only tend to finance cars that are less than 10 years old.
  • Mileage – Vehicles with more than 100,000 miles typically aren't able to be financed.
  • Minimum credit score – Most lenders have minimum credit score requirements, but as a general rule, anyone with a credit score around 660 or lower may benefit from looking for an auto loan with a subprime lender. These lenders are typically more willing to assist people in unique credit situations.
  • Minimum insurance coverage – When you finance a car, you're required to carry full coverage auto insurance. This means having some form of liability, collision, and comprehensive insurance that has a high enough coverage limit to cover the value of your vehicle.

While you're keeping all of this in mind, also know that you're required to bring documentation to the dealership with you to prove that you meet these (and possibly other) qualifications. You don't actually meet with your lender when going through a subprime lender (they're a third party), and the special finance manager at a dealer interacts with them on your behalf. It's best to be 100% prepared to take on the process of a bad credit car loan before you head to a dealership.

It Pays to Be Prepared

Before getting an auto loan with poor credit, the first step you should take to prepare for the process is to check your credit score and reports. The most commonly used credit score among lenders is the FICO scoring model. This has a credit score range of 300 to 850, and the higher your number, the better your credit is. The better your credit, the easier it may be for you to take on a car loan.

It's important to know where your credit stands right from the start because shopping for the wrong type of loan with the wrong type of lenders can lead to multiple hits on your credit score due to hard inquiries. This only drops your credit score farther, making it that much harder to get the vehicle you need.

Now through April 2021, you can get your credit score and reports for free, once a week, from each of the national credit bureaus – Experian, Equifax, and TransUnion. Typically, this free service is only permitted once every 12 months by visiting www.annualcreditreport.com. However, with the coronavirus pandemic forcing so many Americans out of a job this year, the credit bureaus are allowing for weekly credit monitoring in order to help people who are impacted by unique situations.

Let Us Help You Take the Next Step

After getting your credit score and reports, you're ready to start doing car research and find the right fit for your next ride, but you still need to know where to go to get the financing that’s going to work with your credit. At CarsDirect, we can help with that.

We've cultivated a nationwide network of special finance dealers all across the nation that are signed up with subprime lenders. No matter if you're starting with little or no credit, a poor credit score, or just coming out of a bankruptcy, let one of our dealerships get you into the vehicle you need.

It's our pleasure to help you skip the hassle of the search – just fill out our fast, free, and no-obligation 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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