Having a tarnished credit score can impact your vehicle’s purchasing power, but it’s not the end of the line yet. Whether your credit is bad or really bad, there are bad credit car loan resources available and we want to help you find them.
Bad credit vs really bad credit
AT Auto Express Creditwe often receive messages from borrowers saying,
“I have really bad credit – can i get a car loan? »
Many consumers tell us about their specific credit score and ask if they are able to obtain financing, but credit scores vary widely. A credit score of around 660 or less is generally considered bad credit. The FICO credit score model is between 300 and 850, so that’s a wide range.
Here is a breakdown of credit score ranges:
- Super first: 781 to 850
- First: 661 to 780
- Not prime: 601 to 660
- Subprime: 501 to 600
- Deep subprime: 300 to 500
Getting a traditional car loan can be tricky once you get into the 600 and lower range, as most direct lenders from banks, credit unions, and online lenders require a good credit score for approval. Bad credit can make getting a car loan difficult, but it’s not impossible, and there’s more to vehicle financing than just your credit score.
Bad credit has different causes
It’s important to keep in mind that the information in your credit reports creates your credit score. This is what worries many lenders, especially if you have a lower score.
For example, a borrower with a recent repossession may have more problems applying for a car loan than a borrower whose bankruptcy has recently been discharged. A borrower with bad credit due to an insufficient credit history may be viewed more favorably than someone with a long credit history who has many negative ratings. All of these scenarios involve having a lower credit score, and they all have different chances of affecting your chances of auto loan approval.
In other words, what leads to the lower credit score also influences your chances of approval — not just the three-digit number that makes up your credit score.
It’s possible to get a car loan with poor credit if you work with the right lender and can prove you can handle new credit. Subprime auto lenders, or bad credit lenders, take a closer look at your individual circumstances to determine your eligibility for an auto loan, because your credit score only tells part of the story.
Subprime car loans
For borrowers who don’t meet the requirements of a traditional lender, a subprime auto loan could be the solution.
These lenders are signed up with special financing dealers. They often help borrowers who have situational bad credit, no credit, bankruptcy on their credit reports, and even those who have a reported repossession. To do this, they examine the many determining factors of your financial stability. and overall credit history.
There are three keystones to address in order to qualify for a subprime auto loan: capacity, stabilityand will.
- Capacity refers to your ability to repay the car loan. This means proving that you have enough income and sufficient disposable monthly income to pay for the loan and vehicle expenses. Subprime lenders generally require a minimum monthly income of around $1,500 to $2,500 before taxes.
- Stability refers to your work history and living conditions. Subprime lenders often require their borrowers to have lived at the same address for at least a year. They also generally require a consistent work history over the past three years and that you have been in your current job for about a year.
- Willingness refers to your willingness to pay, and this is proven with a down payment. Down payments increase your chances of getting the loan and, in turn, increase your chances of car loan approval.
Meeting these qualifications is often more important than having a good credit score in the eyes of a subprime lender. Even if you think your credit score is really bad, meeting these requirements can signal to the subprime lender that you are able and willing to take out a car loan.
Very bad credit ratings and vehicle financing
Under certain circumstances, you may not qualify for subprime loans. For example, a borrower whose repossession is less than a year old is not likely to get an auto loan approval. Most subprime lenders require a repo to be at least one year old before they can consider you for vehicle financing. Borrowers with multiple late payments on previous loans may also have difficulty obtaining a subprime auto loan.
For those who have recent and serious late payments on their credit reports and cannot get auto loan approval from a subprime lender, a Buy Here Pay Here (BHPH) dealer may be a solution.
These dealerships are notorious for their lack of credit checks, which means that your “really” bad credit does not influence your car loan eligibility. In return, you can expect higher interest rates and a large down payment. Your car loan may not be reported either, because most lenders who ignore the credit application do not report their loans or your payments on time.
While a higher interest rate may be a deterrent to many borrowers, a BHPH dealer could be a quick and easy solution if you need a vehicle fast with a very bad credit history.
Ready for a car loan?
Many people need vehicles for their daily lives, and bad credit can make it difficult to secure the things you need. Here has Auto Express Creditwe know how difficult it can be to find the resources you need with bad credit, so we’re here to help.
Through our national dealer network, we’ve connected borrowers with dealers in their area who know how to help borrowers with bad credit. Get started today by filling out our free auto loan application form. There’s never a cost or obligation, and we’ll get to work right away finding a dealer near you who’s signed up with subprime lenders.