Should I Get a Direct Loan?

Get Car Financing
Even with poor credit.

By

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, 2018

Direct loans can be hard to come by for borrowers with bad credit, but credit unions are a good place to start the search.

Direct Loans from Banks vs. Credit Unions

When a borrower gets a loan straight from a financial institution, such as a bank or a credit union, it’s a direct auto loan. Not all potential buyers qualify for direct lending.

Credit challenges make it more difficult to secure financing from a bank. As publicly owned entities, banks have a responsibility to their shareholders and focus on profit. Profit-focused financial institutions have higher costs such as overdraft fees, transfer fees, minimum balance fees, and ATM fees (to name a few). Though size helps banks get money at a cheaper rate and offer competitively priced loans, they typically reserve the best deals for borrowers with good credit.

Unlike banks, credit unions are member-owned, non-profit entities. They tend to pass savings on to their members in the form of lower interest rates on things like credit cards and auto loans. Even someone with credit issues may qualify for a car loan from a credit union, as long as they’re a member in good standing.

Not a member of a credit union? In the past, credit unions often had eligibility requirements relating to employment, fraternal affiliations, or location. Today, membership tends to be easier to come by.

What If I Don’t Qualify for a Direct Loan?

In contrast to banks and credit unions, a borrower who gets financed through a dealer has indirect financing. There are many lenders who offer indirect loans through dealerships, but not all of them offer bad credit car loans.

Consumers that have trouble qualifying for direct lending due to their credit usually need a subprime lender. These lenders only work through special finance dealers. To qualify for subprime financing, consumers need to meet specific requirements that vary by lender but typically include: a valid driver’s license, minimum income and employment qualifications, residency requirements, proof of a working landline or contract cell phone, and personal references.

Because these loans aid people with lower credit, they have higher interest rates and certain vehicle restrictions. Additionally, subprime loans are a great tool for credit building. Making all payments on time and in full can lead to improved credit over the term of a loan.

Ready to Find Financing?

If you’re seeking auto financing but don’t know where to turn, CarsDirect wants to help. We specialize in assisting people with credit challenges by matching them to a local special finance dealer. We work with a nationwide network of these dealers that have the lending resources to help you. There’s never any obligation, and it’s simple to fill out our online auto loan request form. What are you waiting for? Get the process started today!

Need a Car Loan?

It only takes a minute.

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.


Search New Cars by Loan Payment »

View estimated loan payments based on local rebates and financing offers.

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 CarsDirect.com's Terms of Use, Disclaimer, Privacy Policy, and Cookie Policy.

Privacy Policy|Terms of Use|Cookie Policy|Disclaimer
COPYRIGHT 1999-2019 MH Sub I, LLC dba CarsDirect.com