What are the Minimum Requirements for a Bad Credit Car Loan?

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Contributing Writer

David Topham covers the automotive and auto finance industries as the Content Manager of Auto Credit Express who also contributes to CarsDirect. He was born and raised in Michigan and is a graduate of Michigan State University.


, Contributing Writer - February 23, 2018

Consumers with bad credit need to meet the specific requirements of subprime lenders, as well as provide certain documents.

Basic Bad Credit Car Loan Requirements

There are no set standards because subprime programs always vary by lender, but the requirements typically involve:

  • Income and Employment: Borrowers with bad credit need to make around $1,500 to $2,000 a month before taxes from a single source. Subprime lenders look for a stable income and usually a minimum of six months on a current job with a three-year employment history.
  • Credit: Subprime lenders examine borrowers' credit scores and histories to determine which program they qualify for – if they can get approved in the first place. With all the factors involved, it's hard to put a number on a minimum credit score needed to qualify.
  • Age and Residency: Borrowers need to be at least 18 years old and a current legal resident or citizen to enter into a loan agreement in the United States.
  • Down Payment: Subprime lenders usually require a down payment in the form of cash or trade-in equity, commonly the lower amount of $1,000 or 10 percent of the car's selling price.

Again, the details vary depending on the lender and loan program, so borrowers shouldn't get discouraged from applying if their situation doesn't perfectly match these guidelines.

Providing Proof: What You Need to Get Financed

Borrowers must verify certain information with the proper documentation, known as stipulations (or "stips" for short) to lenders. These include:

  • Proof of Income: Borrowers need to prove what they make with a computer-generated paycheck stub from the past 30 days that lists year-to-date earnings. In some cases – especially with self-employed borrowers – subprime lenders require multiple years of professionally prepared tax returns.
  • Proof of Residence: Borrowers must bring a recent utility bill in their name and at the residence listed on their application.
  • Proof of a Phone: Subprime lenders require borrowers to have a phone in their name. Lenders accept proof of a working landline or contract cell phone from a national carrier (pre-paid plans not accepted) with a recent phone bill.
  • Personal References: Subprime lenders ask for a list of anywhere from five to 10 personal references complete with names, addresses, and phone numbers. The borrower can use anyone they know, from friends to family to coworkers, but none can live at the borrower’s address.

Borrowers also need to bring their valid driver’s license.

Auto Financing for Consumers with Bad Credit

If you're dealing with credit trouble and need a car loan, CarsDirect is here to help. We match consumers to local dealerships that know how to handle unique credit situations from within our nationwide network. Get started by filling out our free and secure auto loan request form today.

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, Contributing Writer

David Topham covers the automotive and auto finance industries as the Content Manager of Auto Credit Express who also contributes to CarsDirect. He was born and raised in Michigan and is a graduate of Michigan State University.


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