Qualifying for a Bad Credit Car Loan

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.


, - January 30, 2020

When you have bad credit, there are a lot of qualifications lenders ask you to meet before you can be considered for an auto loan. Even though getting a car loan with bad credit requires a few more steps, having one can help you improve your credit score and your chances for a better loan the next time around.

Qualifying for a Car Loan with Bad Credit

If you need a bad credit auto loan, it's typically not as simple as heading to the bank for pre-approval, or picking out a vehicle and signing the paperwork. These situations usually require a borrower to have good credit. There are a few more steps involved if a borrower has poor credit.

With bad credit, lenders look at factors in addition to your credit score which show them your ability to take on a car loan, along with your stability and willingness to be successful with a loan.

In order to qualify with most lenders that work with bad credit borrowers, you need to meet these requirements:

  • Proof of income – Lenders require that you make enough to comfortably afford an auto loan and car insurance, which means having a debt to income ratio below 45% to 50%. Due to this requirement, most lenders need you to make a minimum of $1,500 to $2,000 a month before taxes from a single job. Bring in a computer-generated check stub showing year-to-date income as proof.
  • Proof of residence – Lenders require you to provide a current utility bill in your name for the address listed on your application.
  • Proof of a working telephone – A landline or contract cell phone bill in your name is required. Prepaid phones don't qualify.
  • Personal references – Typically, a list of five to eight personal references, complete with full names, addresses, and home and work phone numbers is required.
  • A down payment – In order to show that you're willing to be successful in an auto loan, lenders require you to "have some skin in the game." This generally means providing a down payment of at least $1,000 or 10% of a vehicle's selling price, whichever is less.

Even though the requirements are usually universal with bad credit lenders, specific items can vary, so be as prepared as possible before heading to a dealership.

Additionally, as a bad credit borrower, you should know that your best chance at finding the financing you need comes from a subprime lender. These lenders are indirect lenders that work through special finance dealers.

Finding a Dealership for Your Credit Situation

Not all lenders work with bad credit situations, and those that do aren't always easy to pick out of a crowd. That's where CarsDirect can be of assistance. We’re teamed up with a nationwide network of special finance dealerships that have lenders prepared to work with people who are facing credit challenges.

To get started with a dealer in your area, simply fill out our easy, zero-obligation car loan request form, and we'll begin the process right away. Don't waste your time and hard-earned money looking for a dealership on your own. Let our knowledgeable experts help you get the vehicle and auto loan you're looking for by getting the process started right now!

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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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