When you're financing a vehicle through a special financing dealership, it's not just you that has to meet the qualifications of their subprime lending partners. The car you're thinking of buying has to meet certain vehicle requirements as well.
Financing Lower Cost Cars
Vehicle requirements at special financing dealers consist of minimum age, mileage, and loan amounts. You might think it would be easier to finance an older, lower-cost car when you have poor credit, but that usually isn't the case.
In fact, it often costs more to finance an older, high-mileage vehicle, especially if it has a lower selling price. Ultimately, it costs more to finance these kinds of cars because there's a greater potential for breakdowns. Believe it or not, lenders that work with bad credit want you to finance a reliable vehicle, not just an affordable clunker.
For this reason, bad credit borrowers should note that newer model cars, and vehicles with lower miles on them, often qualify for better loan terms. These cars tend to qualify for lower interest rates and longer loan terms than older, less reliable models. This is an important thing to realize, because lower interest rates and longer term loans mean a lower monthly payment.
Vehicle Requirements for Special Financing
As a bad credit borrower, these are the basic vehicle requirements you have to remember when you need financing. The specifics vary by lender, but you can expect these general stipulations:
- Vehicle age – Most lenders don't allow borrowers to finance cars that are over 10 years old.
- Vehicle mileage – Vehicles with more than 100,000 miles typically can't be financed.
- Minimum loan amount – The total cost of financing must be at least $5,000, in most cases, but this doesn't mean the car itself has to be this much. Just the loan amount.
Besides choosing a vehicle that meets these requirements, you need to meet the lending requirements on your own. In order to qualify for a bad credit auto loan through a special finance lender, you generally must provide:
- Proof of income – You have to prove that you make enough to repay a car loan. This typically means providing your most recent check stub which shows an income of at least $1,500 to $2,000 a month before taxes. Your pay stub must be computer-generated and show year-to-date income.
- Proof of residence – A current utility bill in your name at the address listed on your auto loan application is required.
- Proof of a working telephone – Often referred to with the phrase "no phone, no loan," lenders need to make sure they can get ahold of you if an issue arises. For proof, bring in a current landline or cell phone bill in your name. Prepaid phones don't count as proof.
- Personal references – Most lenders require that you provide a list of five to eight personal references. This should include names, address, phone numbers, and email addresses.
- A down payment – When you're dealing with special finance dealerships, a down payment is usually required. Typically, you're required to put down at least $1,000 or 10% of a vehicle's selling price, whichever is less.
Finding a Special Finance Dealership
These requirements allow subprime lenders, and the special financing dealers that work with them, to get a more complete picture of your creditworthiness, and to make sure that you finance a reliable car.
Now that you know what it takes to get your next auto loan, you need to know where to go, and The Car Connection wants to help. We're teamed up with a nationwide network of dealerships that know how to assist credit-challenged borrowers.
Fill out our free and fast car loan request form, and we'll get to work connecting you with a special financing dealer near you. Don't delay – get started right now!