The Easiest Way to Get a Car Loan (Hint: It isn't a Bank)

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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.


, - January 23, 2019

Have you been turned down for an auto loan from your bank? Did you know that it may be even easier to get a car loan if you don't use a bank at all? But, wait ... don't you have to use a bank to take out a loan? The answer, of course, is no. What you need is a lender, and not all auto lenders work through banks.

Direct Lending vs. Indirect Lending

When you go to your bank or credit union and sit down with a loan officer to apply for a loan, it's called a direct loan. In direct lending, you can apply directly with the lender, typically face to face, and if you're approved, you take a check or a pre-approval letter to the dealership to purchase a vehicle.

Another option for auto financing is to go directly to a dealer that works with lenders to provide loans for their customers. This is called indirect lending. The sales person or finance manager at the dealership communicates with the lender on your behalf – you never meet the lender face to face. There are many types of indirect lenders, including lenders who help people with bad credit, called subprime lenders.

Subprime lenders can help if you're struggling with credit issues such as bad credit, no credit, or bankruptcy. Not all lenders work with people in these situations, and not all dealers are signed up with subprime lenders.

Subprime Lenders are Different

When you're struggling with credit issues and have been turned down for an auto loan, you may think getting a car is out of your reach. With the help of a subprime lender, though, this doesn't have to be the case. Unlike traditional lenders, such as banks and credit unions, that rely on a credit score to base your car loan approval on, subprime lenders go beyond credit scores and use other factors to determine if you can qualify.

What subprime lenders are looking for is proof that you have the financial ability to take on an auto loan, job and residence stability, and the willingness to successfully complete it. They do this by asking you to provide documentation and a down payment.

Let's look at what a typical subprime lender may need:

  • Proof of income – A recent computer-generated check stub showing year-to-date income. Lenders typically require you to make between $1,500 and $2,000 a month before taxes.
  • Proof of residency – A current utility bill in your name at the address listed on your loan application.
  • Proof of a working phone – A landline or contract cell phone in your name.
  • Personal references – Typically, a list of six to eight references complete with names, addresses, and phone numbers, with none living at your address.
  • A down payment – Usually $1,000 or 10 percent of the vehicle's selling price, whichever is less. The down payment amount varies from by lender.

By providing these things, you show the lender that you meet their minimum requirements with proof that you have a steady income that allows you to make regular loan payments. Making a down payment also shows a lender your willingness to invest your own money. It's been shown that borrowers who contribute a down payment are more likely to complete loans successfully.

Finding a Subprime Lender

Before you drive all over town looking for a dealership that offers subprime lending, consider this: CarsDirect works with a nationwide network of special finance dealers that can help. What this means for you is that we can connect you to a dealership in your area that has the subprime lenders you're looking for. Simply filling out our free, no-obligation car loan request form gets the process started, and it saves you time and stress. So, what are you waiting for? Get 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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