Vehicle Financing When You Have Bad Credit

Get Car Financing
Even with poor credit.

By

Contributing Writer

Bethany Hickey is a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. She is a content writer for Auto Credit Express, CarsDirect, and many other automotive blogs, as well as the Poetry Editor for UM-Flint’s writing magazine.


, Contributing Writer - June 17, 2020

If you go through a bad credit car lender, the car loan process is a little different from traditional vehicle financing. We’re here to help introduce you to this process and help you prepare for auto financing at a dealership with a special finance department.

Bad Credit Lenders vs. Traditional Auto Lenders

Bad credit lenders are those that work with bad credit borrowers. What makes a poor credit score is subjective based on who you ask, but if your score is around 660 or lower, it’s likely to be considered less than stellar.

Traditional auto lenders are banks, credit unions, and captive financing companies (automaker’s lending divisions). These lenders aren’t likely to approve you for vehicle financing if your credit history is sparse or thin, or if you simply have bad credit.

Finding a dealer with a special finance department is your first step in getting in contact with a bad credit lender, also called a subprime lender. Subprime simply means bad credit, and it’s a term you’re likely to hear when you start your search for auto financing with less than perfect credit. The process is a little different than simply choosing a car then applying for credit – it's actually the opposite.

How a Special Finance Department Works

Once you’ve found a dealership with a special finance department, you’re asked to complete a credit application, which asks questions about your income, residence, your work history, and other things that make up your overall ability, stability, and willingness to complete an auto loan.

After you've submitted your car loan application, the dealer sends it to one or more subprime lenders that can work with your unique situation. If a subprime lender approves you, they’re going to then ask for documents to verify the information on the application. This usually includes things like:

  • Check stubs
  • Utility bills
  • Phone bills
  • Driver’s license

Your subprime lender may require fewer or more items, but these are usually the bare minimum requested. Other situations, such as a recent bankruptcy discharge, may require you to submit additional items.

Once everything is verified, you work with the dealership to pick a vehicle that fits within the subprime lender’s approval guidelines. The lender determines the payment range you can afford based on your income and credit situation.

You and the finance manager then pick a car, then the down payment amount is determined. If you’ve got bad credit, you’re going to need a down payment. It tells the lender that you’re committed to successfully completing the loan. Expect to need at least $1,000 or 10% of the vehicle’s selling price, sometimes whichever is less. You can also put down more than the minimum amount needed.

After all of this is completed, you sign the required documents with the dealer’s finance manager, and then take delivery of your car!

Other Things to Prepare for in Auto Financing

Another thing you should start preparing for is securing auto insurance. When you finance a vehicle, you’re required to have full coverage car insurance during the loan period.

To be able to drive your newly-financed vehicle off the lot, you’re going to need proof of insurance. If you already have a car and it’s insured, you may be able to simply transfer that insurance policy to your new vehicle.

The cost to insure various makes and models differs, so if you have any in mind while you’re looking for a lender, you can typically call auto insurance companies and get estimates.

Another cost to keep in mind is title and licensing fees, sales tax, a dealership’s documentation fee (paperwork fee), and regular maintenance and fuel costs. There's more that goes into the total price of financing cars than just the selling price!

Looking for Bad Credit Vehicle Financing?

Finding a subprime lender that works through a dealer’s special finance department can be one of the biggest hurdles that bad credit borrowers need to overcome – but it may not be a problem if you work with us!

Here at CarsDirect, we have a network of dealerships that work with bad credit lenders and we’ll work to match you to one in your area. To help you get started in bad credit vehicle financing, complete our free and quick auto loan request form.

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.

, Contributing Writer

Bethany Hickey is a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. She is a content writer for Auto Credit Express, CarsDirect, and many other automotive blogs, as well as the Poetry Editor for UM-Flint’s writing magazine.


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