Getting ready to buy your next car is both exciting and stressful. We want to decrease that stress by helping you find the type of financing you're likely to need when you have bad credit: special financing. Getting ready for an auto loan means getting your proof of income, and finding a dealership with a special finance department. We’re here to help you with both!
Income Requirements for Special Financing
To pay for a car, you’ve got to have some income coming in. A subprime lender, or bad credit lender, is usually going to need to see your most recent computer-generated check stubs that show year-to-date income. These stubs prove your income is taxable, earned, and stable.
As far as minimum income requirements, expect to need around $1,500 to $2,500 a month before taxes from a single source. Lenders look for your gross (pre-tax) income and not your take-home pay. If you don't have your most recent check stubs, most employers allow you to request copies of your checks. For an auto loan, be sure to get the most recent check available.
Another thing that improves your chances of getting approved by a car lender is having a long-standing work history. Typically, lenders require a work history of about three years, without large gaps between jobs. The longer you’ve been with your employer, the better it looks to a bad credit lender.
Other Documents to Prepare
Along with proof of income, you should start putting together some other items, too. Lenders vary in their requirements, but expect to need these items to finalize everything at the dealership:
- Recent utility bill in your name at your address
- Valid driver’s license
- Recent phone bill in your name (no pre-paid phones)
- Personal references
- Down payment
The utility bill simply proves your residence; your driver’s license proves your identity and allows you to drive the vehicle off the lot; the phone bill proves you have a working phone so the lender can contact you; expect to provide a list of around five and eight personal references with complete contact information.
When it comes to the down payment requirement of a subprime lender, it varies based on your credit and the price of the car you’re looking to finance. At a minimum, you can expect to need at least $1,000 or 10% of the vehicle’s selling price. You can also use a trade-in with equity to help cover the amount.
Finding a Special Finance Dealership
Now that you have everything you need for the trip to the dealership, you can start looking for a dealer that has a special finance department!
This can be a little difficult, since subprime lenders don’t work with every dealership. To get the ball rolling and start your car shopping journey, get with us at The Car Connection.
We know which dealers are signed up with subprime lenders, and we can look for a dealership with a special finance department in your area for free. Fill out our auto loan request form, and we’ll get right to work for you!