Bad credit auto loans are available. You just have to know where to look!
So your credit history isn’t perfect. Or, you are just starting out and don’t have much history. Auto loans for bad credit are mainly offered to people who have acquired bad credit by late and/or missed payments. Read on to better understand what it’s like to get auto loans for people with bad credit:
What are my chances?
Customer auto credit applications submitted through dealerships are conditionally approved about 40 percent of the time. Of course, this varies widely by auto lender as will the down payment, loan amount, debt-to-income, payment-to-income, requirements. About one quarter (25%) of those approvals end up in funded loans. Commonly referred to as look-to-book, the ratio of bad credit car loan applications to funded car loans runs about 10%.
Does that mean you only have a 1 in 10 chance of getting an auto loan with bad credit? Of course not, because you can submit multiple applications through the dealership and online through SmartCarCredit. Poor credit auto loans make it possible for people with bad credit to buy a car. Poor credit auto loan lenders expect to be approached by people who have poor credit. Get started now by submitting Smart Car Credit's easy bad credit auto loan application
Is getting auto loans for bad credit different than for good credit?
Yes. Here are a a few things to keep in mind when applying for an auto loan for bad credit:
- There are certain minimum requirements that you need to qualify while going for an auto loan with bad credit. When making an auto loan for bad credit, banks will expect proof of income, proof of residence, proof of insurance and personal references. So, if you're shopping for car loans with bad credit, save time by having this information available.
- Many lenders will also expect a pre-funding telephone interview with you to verify certain aspects of your auto loan application. This is to safeguard the lender from the occasional puffery that both dealers and customers undertake. Understand that these calls are as much for your protection as for the auto lender’s.
- While rarely a consumer concern, lender inventory requirements affect dealers. Some lenders prefer to lend on cars of certain make, mileage and age categories. If your dealer is arranging a car loan for bad credit, he will handle this aspect of the application. Online loan lenders and brokers these days work hard to help you get the best auto loans for bad credit deal. Click here for more on working with used car dealers.
- The lender is more involved. While it may sound odd, the lender asserts greate control in subprime auto lending. As subprime auto borrowers are commonly “total payment borrowers” the bank often caps the payment amount. This my mean you will need to come up with a larger down payment. It may mean you can’t afford the car that both you and the dealer picked out. As auto loans for people with bad credit are available online, make sure to shop credit unions and banks to get the best terms. Click here for more on the different types of auto lenders
How long does it take to get a car loan with bad credit?
On average it takes about 16 days to fund car loans for people with bad credit. What takes so long? In a word: “stips”. Stips or stipulations imposed by the lender specify the various proofs and references required to complete a bad credit auto loan (i.e., the proof of income, proof of residence, etc. outlined above). If you want to expedite your funding of your auto loan for bad credit or good, bring proof including your driver license, your social security number, a bill mailed to you at your home address, a recent pay stub from work and proof of insurance provided by your auto insurer. This is particularly important if the clock on your first payment starts ticking upon approval and not funding. Read the auto loan contract to find out!
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Disclosure: We developed the content for SmartCarCredit™ while working with automotive industry clients. We hope you find it helpful in making informed decisions. While we believe the information to be accurate, we do not guarantee its accuracy.
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