Just needing a car right now doesn’t mean that you’re automatically ready for financing! Bad credit auto lenders often require a lot of documents to prove you’re ready to take on a car loan. Here's what to expect when you’re preparing for subprime financing.
Getting Ready for a Subprime Auto Loan
When it comes to getting an auto loan with bad credit, it isn't as simple as walking into a dealer and driving away in a brand-new vehicle. There's a lot of research and preparation to be done before you even step foot into a dealership.
One of the biggest hurdles to getting approved for a subprime car loan is getting all of your documents in order. Lenders typically ask for quite a few items, since they consider more than just your credit score to get a better picture of your financial health, income and residence stability, and ability to pay for a vehicle.
Lender specifics vary, but much of the paperwork you're going to need shouldn't be too hard to gather. It's a good idea to prepare your documents beforehand to make things easier on yourself and the special finance manager at a dealer.
Most subprime auto loans have similar guidelines, so you can prepare these things in order to get ready to start your process:
- Check stubs showing a minimum monthly income around $1,500 to $2,500 (gross)
- Proof of a working landline or contract cell phone in your name
- A utility bill or bank statement to prove stable residency for at least one year
- A valid driver’s license (not expired, revoked, or suspended) that lists your current address
Proving you can meet these requirements is just the first step in getting a car loan from a bad credit auto lender. In most cases, you also have to provide a list of around five to eight personal references with complete contact info, and a down payment of at least $1,000 or 10% of the vehicle’s selling price.
These are typically the minimum requirements for a subprime loan. Specifics like the needed down payment amount can change depending on the car’s selling price and what you qualify for.
How Subprime Car Loans Work
Now that you've gathered all your documents and are prepared to head to the dealership to find your next vehicle, it's important that you know how the process of getting a subprime auto loan works.
Subprime car loans are for borrowers with poor credit, no credit, or those with some unique credit situations like bankruptcy. These lenders are indirect, third-party lenders that are signed up with dealers that have special finance departments.
Once you find a dealership to work with, you typically sit down with the special finance manager, who acts as the go-between for you and the lender. You submit all of the documents you gathered to the special finance manager, who verifies that all your information is accurate. They then send your info to one or more subprime lenders. If you qualify for an auto loan, the subprime lender tells the dealer the maximum monthly payment that you qualify for.
From there, the dealership lets you know which vehicles are in your price range, and you can work with them to find a car that fits your needs and budget. You can then sign all the necessary paperwork and take delivery of your next vehicle!
Let Us Find You a Special Finance Dealership
Special finance dealers help borrowers get into the auto loans they need while giving them a chance to repair their credit. Subprime car loans are reported to the major credit bureaus, so your loan and on-time payments can improve your credit score.
Like we mentioned earlier, getting a subprime auto loan means looking for a special finance dealership. But how do you tell the difference between a special finance dealer and a traditional dealership that doesn't work with bad credit lenders? You won’t have to worry about doing this alone if you start right here with The Car Connection.
We have a nationwide network of special finance dealers, and we connect borrowers to them for free, with no obligation. Start by filling out our free car loan request form, and we’ll get to work looking for a dealership in your local area.