Sometimes life gives us lemons, and those lemons can affect our credit score. If you’ve been through a major event that burned your credit, it can be difficult to get approved for things you need, like a car loan. However, some lenders may be willing to work with your situational bad credit.
Different types of bad credit
Situational bad credit is different from regular bad credit and is generally viewed more favorably as well.
It sounds like usual bad credit: the borrower may have gotten into the habit of missing payments, mismanaging their accounts, or default on loans over time. Having a typically bad credit rating can mean having to overcome negative ratings that may have been the result of poor financial management.
Situational bad credit, on the other hand, occurs when an event in life causes a breakdown in your finances. In turn, this event extends into your financial health and can ruin your credit score. Here are some common examples of situational bad credit scenarios:
- Work accident
- Bankruptcy (for situational reasons above)
There are cases when borrowers get too sick to work, which can lead to missed payments and lower credit scores. Divorce can often lead to a financial split and confusion over which spouse pays for what. All of the above examples can cause big problems and turn a good credit score into bad in a matter of months. It doesn’t take much to lower a credit score – even a missed payment can stay on your credit reports for up to seven years.
Despite situational bad credit that lowers your credit score, you are not yet short of credit. There are still auto lenders who can help you if you meet their requirements, and they are called subprime lenders. Financing a vehicle can be more difficult for people with typical bad credit, but in some cases subprime lenders may also be able to lend a hand.
Bad credit auto lenders
Whether some life event has caused you bad credit or you’ve simply overlooked some bills (it does happen), finding a subprime lender can be your next step in getting your next car. To get in touch with any of these lenders, you need to find a dealer with a special financial service. Subprime lenders are third party lenders who work through dealerships.
Meet the requirements for an auto loan with bad credit means proving that you have the ability, stability and willingness to pay for a vehicle. This translates into proof that you have an income, a stable living situation, and a down payment, all of which are ready to take out a car loan.
Here are some requirements of subprime auto lenders:
- You have income approximately $ 1,500 to $ 2,500 per month before taxes. Computer generated check stubs are required to prove your income.
- You have a stable work history at least the past three years, with no large gaps (typically 30 days or more) between jobs. Lenders usually require that you have been in the same job for about a year.
- You have a working phone, either a contract cell phone, or a landline phone that can be proven with a recent phone bill. Subprime lenders do not accept prepaid phones.
- You have a valid driver’s license which has not expired, suspended or revoked. It should show your current address.
- You have a permanent residence. This can be proven with a recent utility bill or a bank statement in your name.
- You have a deposit at least $ 1,000 or 10% of the vehicle’s selling price. A trade with equity can also help meet this requirement.
- You have a list of personal references, usually between five and eight people with full contact details (phone, address, e-mail, etc.). A personal reference can be anyone who doesn’t live with you.
Depending on your credit situation, you may need to bring more or less documents. For example, if you were recently released from bankruptcy but it doesn’t show up on your credit reports, you might need to prove it. Just have your discharge papers handy to prove that you are in the clear for new credit.
These requirements are used to determine how well you are prepared for your next auto loan. Fortunately, most of these documents are things you can get quite easily. Start compiling your evidence now while you search for a dealership with bad credit loan options, and we can help!
Subprime dealers and lenders
Finding a dealer who has signed up with subprime lenders can be tricky – how do you tell them apart? It’s there that Express auto loan enter because we know how to distinguish them!
We have a nationwide network of dealerships with special financial services. These sites are prepared to work with borrowers in many different credit scenarios – usual or situational.
To search for resellers in your area, fill out our free auto loan application form. We will search for a dealer near you free of charge!