If you want to learn about auto loans for bad credit, then you’ll want to read this article. Specifically, we’ll discuss how to qualify for an auto loan for bad credit, what will make you less likely to qualify for a bad credit auto loan and where to find an auto loan for people with bad credit. After reading this article, you should be able to know enough to start your search for the right auto loan for you.
How to Qualify for an Auto Loan for Bad Credit
The most important factors in qualifying for this type of loan are: proof of employment, be over the age of 18, be a US Citizen (not always required), and have a minimum monthly income – generally around $1500 per month. It will also benefit you if you have lived at the same address for more than 3 years. You will be asked to prove your income with paystubs and possibly tax documents. You may also be required to show proof of residency – usually utility bills.
Your credit score will be checked, but will probably not exclude you from receiving the loan as long as you meet the criteria above. The credit score will be a factor however in determining your interest rate. The lower the score, the higher the interest you will be likely to pay.
What May Keep you From an Auto Loan for Bad Credit
If you are a temporary worker or a seasonal worker, you may not be able to qualify since you cannot prove stable employment. If you have had a recent repossession that was not part of a bankruptcy, that will also likely exclude you from qualifying. If you are under 18 you will not be able to obtain a loan without a co-signer. If this is the case for you, consider asking your parents or guardian to act as a co-signer for you. Lenders generally will not loan on cars older than 7 years, so keep that in mind when shopping for your car.
Where to find Auto Loans for People with Bad Credit
Depending on your credit and your relationship with your bank, you may be able to be pre-qualified for an auto loan at your banking institution. Talk with your local banker to find out what kinds of programs they offer. Another option is to look at Credit Unions to see if you can pre-qualify with them. If these two methods do not work, work with the car dealership. Generally they have special relationships with numerous financial institutions and they have a vested interest in helping you find a loan – if they can’t help you, you won’t buy from them. Be careful about “Buy Here/Pay Here” car lots however, those loans may not be serviced by the more reputable financial institutions and you will likely pay far more in interest than you need to.
Summary
If you have less than perfect credit, consider a bad credit auto loan. Although the interest rates may be a bit higher, it can get you into reliable transportation. Remember that you have to have a stable job, be over 18 and be a US Citizen. Also, be sure to shop for a car that is less than 7 years old in order to qualify for most loans. Banks and Credit Unions are a good place to start when looking for auto loans for bad credit, followed by a reputable car dealership.
With this information you should be able to start your search for a bad credit auto loan and find the right program that will fit your needs and your budget.
