Consumers often ask us what the vehicle requirements for bad credit auto loans are. While there are specific age and mileage requirements the car has to meet, there’s a lot more to getting approved for financing than making sure the vehicle you choose fits the lender’s requirements.
Vehicle Requirements for Bad Credit Auto Loans
If you’re dealing with bad credit, you more than likely need to get financed through a subprime lender. These lenders work through special finance dealerships, and offer loans to credit-challenged consumers.
Each subprime lender has their own car requirements, but most follow these three general rules:
- Age limit – High-risk lenders typically have vehicle age limits. Generally, they don’t finance cars over 10 years old, but some cap this at seven.
- Mileage limit – Just like age, there are usually mileage limits. Typically, subprime lenders won’t finance vehicles with over 100,000 miles on the odometer, regardless of its age.
- Minimum amount financed – In addition to those two requirements, lenders have a minimum amount they’re willing to finance. This is usually $5,000, but this also varies by lender. Keep in mind that this is the total amount being financed, not the car’s selling price. It’s possible to finance a vehicle with a selling price that’s less than $5,000 as long as the total amount you’re financing meets the lender’s minimum requirement.
In addition to picking a car that fits the lender’s requirements, you need to qualify for the loan, as well. Just like the vehicle requirements, each lender’s financing requirements for bad credit car buyers vary, although these are some general guidelines:
- Proof of income – A recent computer-generated pay stub showing year-to-date earnings. Most subprime lenders require an income of at least $1,500 to $2,000 a month before taxes from one job.
- Proof of residence – A recent utility bill in your name listing the address on the application.
- Down payment – Usually of $1,000 or 10% of the vehicle’s selling price, whichever is less. You can use cash, trade-in equity, or a combination of both.
- Proof of a working phone – A recent phone bill in your name at your address. It can be a landline or contract cell phone.
Although not required by all lenders, some may ask for a cosigner or co-borrower. This usually happens if you have very little or even no credit history. Subprime lenders want to make sure that the loan is going to be paid, and having a cosigner or co-borrower can do more than just increase your approval odds – it could lower the interest rate and overall cost of the loan, making it more affordable for you.
Ready to Find Financing?
Now that you know what it takes to get approved for a bad credit auto loan, are you ready to take the next step and get the financing process started? If so, The Car Connection is here to assist you.
We work with a network of dealerships all across the country that want to help you get the vehicle you need. Our service is free and doesn't put you under any obligation. Fill out our online car loan request form to get started right now!