Having a tarnished credit rating can impact your vehicle’s purchasing power, but that’s not the end of the line yet. If 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 Express auto loan, we often get messages from borrowers saying:
“I have really Bad Credit – Can I Get A Car Loan? “
Many consumers tell us their specific credit score and ask if they are able to get financing, but credit scores vary a bit. A credit score of around 660 or less is generally considered bad credit. the FICO credit scoring model has a range between 300 and 850, so it’s a broad spectrum.
Here’s a breakdown of the credit score ranges:
- Super prime: 781 to 850
- Premium: 661 to 780
- Nonprime: 601 to 660
- Subprime: 501 to 600
- Deep subprime: 300 to 500
Getting a traditional car loan can be difficult once you get into the 600 range and below, as most direct lenders from banks, credit unions, and online lenders require a good credit score to be approved. Bad credit can make it difficult to get a car loan, but it’s not impossible, and car financing isn’t just about your credit rating.
Bad credit has different causes
It is important to keep in mind that the information on your credit reports creates your credit score. This is what worries many lenders, especially if you have a lower score.
For example, a borrower who has recently repossessed may have more difficulty applying for a car loan than a borrower who has recently been discharged from bankruptcy. A borrower with poor credit due to a missing 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 getting a car loan approved.
In other words, what leads to a lower credit score also influences your chances of approval – not just the three-digit number that makes up your credit score.
It is possible to get an auto loan with poor credit if you work with the right lender and can prove that you can handle new credit. Subprime auto lenders, or bad credit lendersTake a closer look at your individual circumstances to determine your car loan eligibility because your credit score only tells part of the story.
Subprime auto loan
For borrowers who do not meet the requirements of a traditional lender, a subprime auto loan could be the solution.
These lenders are registered with special financial concessions. They often help borrowers who have situational bad credit, no credit, bankruptcy on their credit reports, and even those with a reported repossession. They do this by looking at the many moving factors of your financial stability. and overall credit history.
There are three keystones to be approached in order to qualify for a subprime auto loan: capacity, stability, and will.
- Capacity refers to your ability to repay the auto loan. This means proving that you have sufficient income and sufficient monthly disposable income to pay loan and vehicle costs. Subprime lenders generally require a minimum monthly income of around $ 1,500 to $ 2,500 before taxes.
- Stability refers to your work history and life situations. Subprime lenders often require their borrowers to live at the same address for at least a year. They also usually 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 it is proven by a down payment. The down payments increase your chances of completing the loan and hence increase your chances of auto loan approval.
Meeting these qualifications is often more important than having a good credit rating in the eyes of a subprime lender. Even if you think your credit score is really bad, meeting these requirements can signal the subprime lender that you are able and willing to take out a car loan.
Really bad credit scores and vehicle financing
Under certain circumstances, you cannot qualify for subprime loans. For example, a borrower whose repossession of their credit reports is less than a year old is not likely to get a car loan approval. Most subprime lenders require a repo to be at least a year old before you can consider car financing. Borrowers who have multiple late payments on past loans may also have difficulty obtaining a subprime car loan.
For those who have recent and serious defaults on their credit reports and cannot get an 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 requirement. Your car loan may also go unreported, as most lenders who skip credit do not report their loans or payments on time.
While a higher interest rate can be a deterrent for many borrowers, a BHPH dealership could be a quick and easy fix if you need a vehicle with a very poor credit history fast.
Ready for a car loan?
Many people need vehicles for their daily lives, and insufficient credit can make it difficult to get what you need. Here has Express auto loan, we know how difficult it can be to find the resources you need with poor credit, so we’re here to help.
Through our nationwide dealer network, we’ve matched borrowers with dealers in their area who know how to help bad credit borrowers. Start today by filling out our free auto loan application form. There’s never a cost or obligation, and we’ll immediately get to work finding a dealer near you who has signed up with subprime lenders.