December 3, 2022
  • December 3, 2022

Is a subprime auto loan bad credit?

By on June 14, 2021 0

Yes, subprime financing is designed for bad credit borrowers. However, risk financing is not the only bad credit auto loan option for borrowers in need of a vehicle.

Unsafe Auto Loans For Bad Credit

If your credit score is below 660, traditional auto financing can be difficult to obtain. Typically, good borrowers can go to a direct lender like a bank, credit union, or captive lender for a car loan. These lending institutions may have high credit rating requirements that some borrowers with bad credit cannot meet.

This is where subprime financing can help.

Subprime lenders specialize in helping bad credit borrowers with credit scores of around 660 or less and often help new borrowers with limited credit histories. In fact, there is a range of credit scores called “subprime” which is used to rank borrowers whose credit is not perfect.

The subprime lenders are third party and signed with special financing dealers. They often work with situations such as bankruptcy, situational bad credit, first time car buyers, or past repossession. To apply for a subprime car loan, start by finding a special finance dealership that is partnering with them.

While subprime lenders can work in many unique credit circumstances, you still need to prove your creditworthiness. Typically, this means providing documents such as:

  • Computer generated check stubs
  • Most recent utility bill in your name
  • Last phone bill in your name
  • Valid driver’s license
  • Advance payment
  • List of personal references

If your credit history isn’t great but you have the resources to pay off a car loan and a down payment ready to go, subprime financing could be how you get a vehicle with a bad credit score.

An alternative car loan option for bad credit

Financing subprime is not the only way for borrowers with bad credit to obtain auto financing! There are concessions called Buy Here, Pay Here (BHPH) – where a credit check may not be required. If your credit is not taken out, your low credit rating has no say in your car loan eligibility.

BHPH dealers are often a go-to option for borrowers with a tarnished credit history. While dealerships who don’t check your credit may not report your loan or payments on time, this could be a route to a car loan without your credit getting in the way.

Typically, BHPH dealerships consider your income and down payment to be the most important aspects of your car loan eligibility. If you have proof of income, cash on hand, proof of address, and a working phone, this may be enough to get auto financing.

BHPH dealerships can also be a good option for borrowers who aren’t quite making the cut for subprime auto loans. Subprime lenders can work with many bad credit borrowers, but they may not be able to help with all situations, such as severe and recent defaults on your credit reports, such as a recent credit recovery. possession.

Need a bad credit auto loan?

Getting the right car loan for your credit situation starts with knowing where to look. But instead of doing all of that yourself, let us take the reins and direct you to a dealership that has the resources to help bad credit borrowers get the car they need.

Auto Express Credit has created a nationwide network of specialty finance dealers, and we have over 20 years of experience matching borrowers with dealers in their area. Fill out our free auto loan application form. We will search for a dealer in your area free of charge and without obligation. It only takes a few minutes, so get started today!