Special financing dealerships offer auto financing to car buyers dealing with unique credit situations. It can be difficult to spot a special financing dealer, since most don’t advertise that they are. Keep reading to learn more about special financing dealerships, what they require for financing approval, and how we can help you get connected to one.
Special Financing Dealership Requirements
Special financing dealers work with subprime lenders, who extend auto financing to consumers with bad credit. Subprime lenders run credit checks, but base approvals on additional factors, including:
- Proof of income – Subprime lenders want to make sure you have enough available income to afford a car loan. The amount varies, but most require a minimum of $1,500 to $2,000 a month before taxes from a single source. Bring a recent computer-generated pay stub with you to the dealership that shows your year-to-date earnings to serve as proof of income.
- Proof of residency – Lenders want to make sure the address listed on the application is where you truly live. Bring in a recent utility bill in your name to your address.
- Proof of a working phone – Subprime lenders want to make sure they can contact you. Bring in a recent phone bill in your name from a landline or contract cell phone.
- Down payment – You almost always have to make a down payment on a bad credit auto loan. However, you usually don’t need a large one. Most subprime lenders ask that you put down $1,000 or 10% of the vehicle’s selling price, whichever is less.
On top of these requirements, you need to have a list of five to eight personal references complete with names, addresses, and phone numbers. Your references aren’t used to determine approval, but you’re going to be expected to have it ready before you take delivery.
Also, although a cosigner isn’t always required, some lenders may ask for one in order to approve you. Depending on your credit situation, you may want to have someone ready just in case.
Another Type of Dealership to Consider
Did you know that there’s another type of dealer you might consider if you have bad credit? They’re called buy here pay here dealerships and, just like subprime lenders, they extend financing to those dealing with credit issues.
What makes these dealers different is that they’re also lenders. They don’t rely on third-party financing sources like special finance dealerships do. These dealers, for the most part, don’t check your credit score at all. Instead, they base approvals on your income and down payment.
The income requirement is generally similar to what subprime lenders look for, but they may not have strict documentation requirements. As for the down payment requirement, buy here pay here dealerships often set it based on the vehicle you choose.
Keep in mind that buy here pay here dealers may not report your payment history to the credit bureaus, unless they tell you otherwise. This means you may not be able to improve your credit score with one of these auto loans. Make sure you ask about their reporting practices before you sign any paperwork, so you know what you’re getting yourself into.
Ready to Start the Car Buying Process?
Now that you know what a special finance dealership is, and what it takes to get approved for a car loan, are you ready to find a dealer that can help? At The Car Connection, we work with a nationwide network of dealerships that have the lending resources available for bad credit consumers.
Getting started is simple! Complete our free and fast auto loan request form, and we’ll get right to work connecting you to a local dealer.