It’s very possible to get an auto loan with a 550 credit score and $500 down. The key is to find the right dealership, work with the right lender, and pick the right vehicle, and we can help you do that.
Dealerships That Offer $500 Down for 550 Credit Score
When you have a credit score as low as 550 and are on a tight budget, where do you go to find the right auto financing? You could try to get pre-approved for a bad credit car loan with your bank or credit union, but these lenders place a heavy emphasis on your credit score to determine approval.
Instead, you likely need to find a local special finance dealership that’s signed up with subprime lenders. Subprime lenders specialize in financing credit-challenged car buyers, but they have additional requirements you need to meet in order to get approved.
Subprime lenders have rules as to the least amount they can extend for financing, with the minimum typically set at $5,000. In addition, subprime lenders typically require a down payment. You can expect to be asked for the lower amount between $1,000 or 10 percent of the vehicle's selling price, although this varies by lender.
This means that if you want to finance a car worth $5,000, you would only need $500 to meet the down payment requirement. While it's okay to settle for the minimum down payment, a larger down payment makes your auto loan more affordable.
Qualifying for a $500 Down Car Loan
These numbers sound great, but how exactly do you qualify for a $500 down car loan? Subprime lenders check your credit score and history, but consider outside factors to determine approval. When you go to a special finance dealership, they’re going to ask you to provide documents such as:
- Proof of income – Although the minimum amount required varies by lender, most like to see a minimum income of $1,500 to $2,000 a month before taxes from a single source. Bring in a recent computer-generated pay stub that shows your year-to-date earnings.
- Proof of residency – Lenders want to make sure the address listed on the application matches where you live. Bring in a copy of a recent utility bill in your name with the address listed on the application.
- Proof of a working phone – Subprime lenders need to know they can contact you, so they require you to have a working phone. Bring in a recent phone bill from a national carrier in your name to prove you do. It can be a contract cell phone or a landline.
On top of the required documents and a down payment, the lender may ask for a cosigner. Not all of them do, but if your credit score is in the 500s, a cosigner could really help your chances of getting approved, as well as potentially make the overall cost more affordable by helping you qualify for a lower interest rate.
Ready to Find Auto Financing?
Here at The Car Connection, we help bad credit car buyers by connecting them to local special finance dealerships that are signed up with subprime lenders. That’s not all we can do, though. With our new and used car sections, you can see what vehicles are for sale near you, and compare different cars to narrow down exactly what you need.
To get connected to a dealership near you, simply fill out our easy and free auto loan request form, and we’ll get right to work for you.