When you have bad credit, it’s not enough to go to just any dealership and expect to get a great deal on a car loan. Traditional auto dealers usually work with lenders that typically only help people with good credit scores above 660. If your FICO score is any lower than that, you need to find a lender that can work with your credit situation – and this means finding a special finance dealership.
What’s the Difference between Traditional and Special Finance Dealerships?
Though most dealers work with multiple lenders to help get their customers car financing, not all lenders are able to approve the same types of borrowers.
Traditional lenders, including banks, credit unions, and some captive finance companies of specific automakers, generally aren’t able to help you finance a vehicle if your credit score is below a certain number. This minimum score varies by lender, but anyone below a “good” credit score typically isn’t able to qualify for a loan at these dealerships.
Special finance dealers, on the other hand, work with lenders that look at factors outside of credit scores to get you approved for an auto loan. These lenders are called subprime lenders.
In order to approve you for a car loan with poor credit, they rely on additional factors such as your income, employment, residence stability, and down payment. These lenders only offer loans through special finance dealerships. Finding one can be challenging on your own, but we can help.
Before we let you know how to find a special finance dealer, let’s take a look at the qualifications you’re going to face.
Special Finance Dealership Qualifications
The qualifications you need to meet in order to get an auto loan from a special finance dealership depends on the lenders they work with. These lenders have different requirements, but subprime lenders typically have similar basic minimum conditions:
- Minimum income – The amount depends on the lender you’re working with, but the minimum income requirement for subprime lenders is usually a gross (pre-tax) monthly income of $1,500 to $2,000 from a single job.
- Minimum employment length – The minimum length of employment needed to qualify for subprime car loans is typically six months at your current employer. These lenders are also looking for a three-year job history with no gaps longer than 30 days between jobs.
- Residency requirements – Most subprime lenders like to see that you have a residence where the financed vehicle is going to be. Lenders typically require you to bring in a utility bill in your name for your home address.
- Down payment requirement – All subprime lenders generally require a down payment as part of an auto loan. The minimum amount needed varies, but, generally, most require $1,000 down or 10% of the car’s selling price, whichever is less.
Finding a Special Finance Dealership
Now that you know your best chance of getting auto financing with bad credit comes from a subprime lender, you need to know where to find one.
Since dealers don’t typically go around posting signs that read “Subprime lenders found here!” it could be a challenge to find one in your area. You could drive around town stopping at every car lot until you find the right one, or you could save yourself time and gas money by filling out our auto loan request form.
At The Car Connection, we work with a nationwide network of special finance dealerships that have the lenders you need to work with for bad credit car loans. Don’t wait any longer to find the lender you need for your next vehicle. Get started right now!