What Do I Need for a Bad Credit Car Loan?

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Content Manager

Bethany Hickey is a Content Manager and Writer for Auto Credit Express, CarsDirect, and many other automotive blogs. She's a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. 

, Content Manager - May 11, 2020

Knowing what to expect from a bad credit lender can give you an advantage. Having your ducks in a row when you apply for a subprime auto loan can help speed up the process, and increase your chances of approval. We’re here to help guide you through the process!

How Bad Credit Car Loans Work

Your credit scores are used to determine your creditworthiness – your ability to repay borrowed money. If you’re struggling with credit issues and you need a vehicle, there are lenders for nearly all types of credit situations.

While many traditional auto lenders may take one look at your credit score and turn you down for financing, this usually isn’t the case with subprime lenders. Subprime lenders use more than your credit score when they’re determining your ability to take on a car loan – you just need to bring some items with you to prove you’re ready.

Subprime lenders work through a dealership’s special finance department to help bad credit borrowers get the vehicle they need. They tailor a budget that fits your financial situation that’s based on more than your credit reports.

Once you find a special finance dealer, you fill out a credit application that outlines your income, living situation, some information about your employment history, and more. This information is sent to a subprime lender, and they determine the monthly payment range you can afford. This is called a payment call, and it’s sent to the dealership. Once they have this, you work with them to find a car in their inventory that fits within that monthly payment budget, sign your contract, and take delivery of the vehicle.

What You Need for a Bad Credit Auto Loan

Getting ready for a bad credit car loan isn’t all that difficult if you know where to start. While every lender is going to vary in their own specific requirements, generally, they need similar items to determine your ability to take out an auto loan.

Here are the commonly requested items used to verify your information:

  • Proof of income – You need a stable income for a bad credit car loan, typically a minimum monthly income of at least $1,500 to $2,000 before taxes. Proven with a recent computer-generated check stub that also shows year-to-date income.
  • Proof of identity – Proven simply with a valid driver’s license. It can’t be suspended, revoked, or expired.
  • Proof of residency – The longer you’ve lived in the same area, the higher your chances of approval. Proven with a recent utility bill or bank statement in your name, with your current address.
  • Proof of working phone – Proven with a recent cell phone bill. Your lender is going to need to be able to contact you, so you need proof you have a working contract cell phone or landline phone.
  • Down payment – Subprime lenders typically require a down payment of at least $1,000 or 10% of the vehicle’s selling price, sometimes whichever is less. If you have a car you’d like to trade in, it can be used to help meet this requirement (if not cover all of it!) if it has equity.

After you submit your credit application for a subprime auto loan, the special finance manager verifies the information on it using the items listed above and sends your application to one or more lenders. If you’re approved for financing, your lender is likely to want a list of five to eight personal references with complete contact information.

Get the Process Started

The bad credit car buying process may feel somewhat backward to a traditional auto loan, and you’d be right to think that. Normally, you choose the vehicle you want to finance before you talk to a lender.

But a subprime car loan is set up this way so you get a vehicle that you can afford with a loan you can successfully complete. A completed auto loan also looks great on your credit reports for all future loan opportunities. Plus, if you keep up on the payments each month, your credit score improves.

If you’re ready to look for a dealership that works with subprime lenders, we’ve got you. Here at CarsDirect, we’re connected to dealers all over the country that have special finance departments for those looking for a bad credit car loan. To get matched to a dealership near you, simply complete our free auto loan request form and we’ll get to work!


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, Content Manager

Bethany Hickey is a Content Manager and Writer for Auto Credit Express, CarsDirect, and many other automotive blogs. She's a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. 

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