You can get a car loan with no money down if you have good credit, but you still go through a credit check. If you have bad credit, you can get an auto loan without a credit check, but you usually have to make a down payment. No matter where you go to get financed with poor credit, whether it be a subprime lender that checks your credit or a buy here pay here dealer that doesn’t, you typically have to put money down.
Financing a Car through a Subprime Lender
Subprime lenders offer loans through special finance dealerships, and have experience with various bad credit situations.
They run credit checks, as well as look to outside factors to determine if you qualify to finance a vehicle. You need to meet their basic requirements, and show proof that you do.
Subprime lenders typically ask for these five things:
- Proof of income – A recent computer-generated pay stub showing your year-to-date earnings. Most lenders require that you make at least $1,500 to $2,000 a month before taxes from a single source.
- Proof of residency – A recent utility bill in your name listing the address on your application.
- Proof of a working phone – A recent phone bill in your name at your address. It can be a landline or contract cell phone.
- A list of personal references – A list of, typically, five to eight personal references complete with names, phone numbers, and addresses.
- A down payment – How much you’re required to put down varies, but most subprime lenders ask for a down payment of $1,000 or 10% of the car’s selling price, whichever is less.
In addition, a subprime lender may ask that you have a cosigner. It doesn’t hurt to have someone on hand that's ready to sign on the loan with you, just in case. By having a cosigner, you increase your chances of getting approved and you may even be able to qualify for a lower interest rate.
Buying a Car through a Buy Here Pay Here Dealer
If you choose to go through a buy here pay here (BHPH) dealer, qualifying for an auto loan is a little different. BHPH dealerships offer in-house financing, which means they both sell vehicles and provide loans.
These places often don't check your credit, which makes them great for people looking for fast financing who aren’t concerned about the type of car they get. Instead, they base approvals on your income and down payment.
Just like subprime lenders, income and down payment requirements vary. While the income requirement is generally similar to those of subprime lenders, the down payment requirement tends to be quite different. Instead of having a typical standard, the required down payment usually depends on the vehicle you choose.
Be aware that some of these dealers don’t report loans or on-time payments to the credit bureaus. This means that this type of loan won't help you improve your credit score. If credit repair is a priority, you may want to ask about their reporting policies ahead of time.
Ready to Find a Dealership?
If you’re stuck trying to find a dealership that can work with unique credit situations, we want to help. The Car Connection is teamed up with a nationwide network of dealers that have the lending resources available to help car buyers with bad, little, or no credit.
Get started today by filling out our free auto loan request form, and we’ll get right to work connecting you with a local dealership.