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Bad Credit Auto Loans

Why should I get pre-approved for an auto loan before I even look for a vehicle?

Even if your credit is poor it is a big advantage to have your financing approved in advance. An approved auto loan is BUYING POWER allowing you to focus on getting the most vehicle for your money, instead of whether or not you can be approved for financing. Knowledge is power. With an approved auto loan you can shop and negotiate vehicle prices the same as buyers with great credit. Having your auto loan already in place BEFORE you start looking at vehicles allows you to shop for a new or used car with greater confidence because:

  • You will know the price range of new or used cars that you can finance and afford.
  • You can buy from dealerships or private parties (in most cases).
  • You will already know your auto loan down payment amount.
  • You will already know your auto loan monthly payment amount.
  • You will already know your auto loan interest rate.
  • You will not have to waste hours at a dealership or bank trying to get financing.
  • You do not have to worry or stress over the financial aspects.

  • So what is a Bad Credit Auto Loan?

    Many people are surprised to learn that even with bad credit it is possible to still get automotive financing. There are banks, finance companies, lenders and auto dealers that specialize in automotive financing for people with credit challenges. These organizations are willing to help people with bad credit get the financing they need for a new or used vehicle, when most traditional lenders are not. These types of loans are known by many names, but no matter what you call it, help is available for people in bad credit situations:
  • Sub-Prime Auto Loans
  • Bad Credit Auto Loans
  • Credit Challenged Auto Loans
  • Second Chance Auto Loans
  • Special Finance Auto Loans
  • Credit Rebuild / Bankruptcy Auto Loans
  • No Money Down / Zero Down Payment Auto Loans
  • No Credit / First Time Buyer Auto Loans
  • Upside Down / Negative Equity Auto Loans
  • Self-Employed / 1099 Employee Auto Loans

  • How do I get pre-approved for a Bad Credit Auto Loan?

    Applying for an auto loan pre-approval is very smart. In addition to increased confidence and buying power, pre-approved financing will save you an incredible amount of time and hassle. There are basically 3 ways to get your financing approved before you start shopping:

  • Apply Online Through a Lender Network

  • By using an online network like eBadCreditAuto.com, you have the ability to apply to multiple auto lenders and auto dealerships that specialize in financing for people with bad credit. Our network has hundreds of willing lenders available to assist you. It would take you days to research, locate and apply to so many potential lenders one at a time. And with our online lender network, you can apply from the comfort and privacy of your home. Responses are usually faster online as well. Clearly, this is the easiest and most convenient method available to secure financing for a new or used car or truck.
  • Visit an Auto Dealership

  • A less desirable method of getting pre-approved is to visit a local car dealership. Most auto dealerships offer financing through the lenders that they work with. Dealerships typically do not have as many potential lenders, and are usually limited to 10 to 20 banks they work with. When it comes to bad credit auto lenders, most dealerships only offer a few choices, if any at all. Most dealerships do not work with subprime banks. When you go, you will want to be prepared to spend some time, usually 2 to 4 hours minimum. And if you do happen to be approved for financing, the approval will only be good for a limited time and ONLY at that dealership. You will not be able to take that approval anywhere else.
  • Visit a Bank

  • The lowest chances of being approved for a bad credit auto loan involve visiting a local bank or credit union. Most national, regional and local banks or credit unions do not offer subprime auto loans at all, catering only to good credit customers. If you elect to visit a bank, it may take some time to complete an application and get a response. Very often, your response will come days later in the mail. And since the bank can only offer you their financing options, you will not have any time-savings benefit.

    How do I qualify for a Bad Credit Auto Loan?

    While there may be additional documentation and verification required, qualifying is not much different from a normal auto loan. Most lenders today do not just look at your credit score (FICO) alone to make a lending decision. They look at your total financial picture and consider several things in evaluating your situation and credit risk:

  • How much is your income?
  • How long have you been on your job?
  • How long have you lived at your residence?
  • Do you rent or own your home?
  • If you have a mortgage, is it current?
  • If you currently have an auto loan, is it current?
  • How much total debt do you have?
  • How much of your monthly income will be spent on a car loan?
  • Do you have a down payment?
  • Is your previous auto loan history good?
  • Do you have recent auto repossessions?
  • Are you filing a joint or individual application?
  • Have you filed a bankruptcy?
  • If so, what type of bankruptcy did you file?
  • Has your bankruptcy has been discharged or completed?
  • Have you reestablished any positive credit?
  • What is your current credit score (FICO or BEACON)?
  • Are you self-employed or a 1099 employee?

  • What will I need to actually get the loan?

    Most lenders will want full verification and documentation before actually funding a loan, so it is important to be prepared to provide copies of everything the lender that approves your loan will require. You DO NOT need to have this information before you can APPLY for an auto loan. Not all lenders will require everything in this list. But any lender that approves you will require copies of these things before they will disperse the proceeds of your loan, and before you can take delivery of your vehicle. Most lenders will ask for the following verification:

  • Proof of Income
    The most recent 30 days of pay check stubs showing taxes being taken out and year-to-date income. These need to match the income that you claimed on your loan auto loan application.
  • Proof of Residence
    A recent utility bill showing your name and current address. Gas, electric, sewer, water or cable bills are preferred. Whatever utility bill you use should be current, with no past due amount.
  • Proof of Phone
    A recent phone bill showing your name and current address. Cell phone bills are normally acceptable.This should also be current with no past due amount.
  • Proof of Drivers License
    A copy of your current valid drivers license. Typically you will need to be licensed in the State that you live in. A valid, in-state drivers license is required for most bad credit auto loans.
  • Proof of Auto Insurance
    A current insurance card or declarations page from your current insurance policy (if you currently have a vehicle). Shop auto insurance quotes HERE.
  • Mortgage Verification
    Your most recent mortgage statement (if you are a homeowner) showing that your mortgage is current. Most auto lenders will not approve anyone that is past due on their mortgage.
  • Auto Loan Verification
    Your most recent auto loan statement (if you have an auto loan) showing that your auto loan is current. Some auto lenders will not approve you if you are past due on your existing auto loan.
  • Chapter 7 Bankruptcy Status
    Proof that your bankruptcy has been discharged or that you have had your 341 creditor meeting. Learn more about bankruptcy auto loans HERE
  • Chapter 13 Bankruptcy Status
    Proof that your bankruptcy plan has been completed or a letter of permission to purchase from your bankruptcy trustee. Learn more about bankruptcy auto loans HERE
  • Self-Employed / 1099 Employee Income Verification
    Your last 2 years of filed federal tax returns, your last 3 months bank statements and any recent 1099 forms. The process for self-employed or 1099 employees can take longer.

  • How long does it take to get approved for a Bad Credit Auto Loan?

    The amount of time to get an approval will vary from lender to lender. Some banks will make a decision within 60-90 seconds. Other lenders can take up to 72 hours. The important thing to remember is that how long it takes does not matter. Getting approved financing for the most vehicle while getting the best possible rate and terms is the goal. And by applying online you will get approved from the comfort of your own home instead of sitting for hours in a car dealership or bank office.

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