Special finance dealerships can help you get a car loan where other dealers can’t because they're signed up with subprime lenders. These lenders have the ability to work with people in many credit situations, and not all lenders do this.
Subprime Lender Requirements
Most traditional lenders – such as banks and credit unions – only approve loans for people with good credit. On the other hand, subprime lenders work with people that have bad credit, no credit, and even a bankruptcy on their credit reports because they base approvals on factors in addition to credit scores.
These lenders look at your ability, stability, and willingness to take on an auto loan by considering factors like your income, employment history, residence stability, and down payment. If you’re able to show that you meet a lender’s requirements for a subprime car loan, you typically don’t have to worry about getting turned down due to bad credit.
In order to meet the qualifications, you have to bring documentation with you to the dealership to provide proof. Though the requirements vary by lender, subprime lenders generally ask for similar items, including:
- Proof of income – A pay stub showing pre-tax earnings of $1,500 to $2,000 a month from a single source.
- Proof of employment – Your pay stub must be computer-generated and show year-to-date income. Typically, you must have been employed at least six months with your current employer.
- Proof of residence – A current utility bill in your name, listing the residence provided on your loan application.
- Proof of a working telephone – A current telephone bill in your name with the address listed on the loan application. This can be either landline or a contract cell phone.
- A list of personal references – Generally, a list of five to eight personal references complete with names, addresses, phone numbers, and email addresses is required.
- A down payment – The usual minimum down payment requirement is $1,000 or 10% of the vehicle's selling price, whichever is less, but this can vary.
Unlike banks, credit unions, and some independent lenders which are direct lenders, subprime lenders are indirect lenders. Indirect lenders don’t work directly with consumers, and instead operate through an agent, such as a dealer’s finance and insurance manager.
The thing about subprime lenders, however, is that they don’t partner with all dealerships. Only certain special finance dealers are signed up with subprime lenders, and they don’t always advertise that they are. This can make it difficult to find a subprime lender to work with on your own.
Finding the Special Finance Dealer You Need
At The Car Connection, we know how difficult it can be to find the right car, and the right lender, when you’re dealing with bad credit. This is why we want to help you find what you’re looking for. Not only can you research vehicles with us, we can help connect you to a local dealership that has the lending resources you need.
We work with a nationwide network of special finance dealers, and the process of finding one in your area is simple to get started. Just fill out our quick, no-obligation auto loan request form and we’ll get to work matching you to a special finance dealership near you.