Are you a candidate for an auto loan for bad credit? If you have a shaky credit score or worse, chances are you’re a prime candidate. Auto loans for poor credit can be obtained, provided you meet certain criteria. The following FAQs should define the loan for you in more detail and answer most of your questions with regards to obtaining one.
What is an auto loan for bad credit?
This type of auto loan is for people who are unable to get approved through the conventional means of securing a loan. Such sources include local banks, credit unions or lenders associated with the major automakers such as GMAC and Ford Credit.
What is the criteria for obtaining a bad credit auto loan?
Auto loans for people with bad credit can be obtained by those individuals who have a low credit score, have filed bankruptcy, are in a lower income bracket, have nothing to put down on a car or have a previous vehicle repossession.
When can’t you obtain an auto loan for people with bad credit?
You won’t be able to obtain loan if you don’t have a permanent job but instead work as a temporary worker, you can’t provide proof of income or have had a recent repossession which wasn’t part of bankruptcy.
What are the basic qualifiers for obtaining the bad credit auto loan?
For you to apply for most auto loans for bad credit, you must typically have to be at least 18 years old, have a minimum monthly income of $1,500, currently reside in the U.S. and are a citizen, have full-time employment that can be guaranteed or a fixed income that can cover the loan term. In addition, it’s important to have a working phone number and proof of residency that can be obtained from a utility bill or credit card statement.
How do you demonstrate proof of income?
Normally with a poor credit auto loan, you will have to demonstrate proof of income depending on your circumstances. For instance, if you’re employed, this can be done readily by showing the lender a payment stub with, sometimes, the previous year’s tax return for validation. If you’re self-employed, proof of income must be demonstrated, typically, by gathering three years of tax returns prepared by a professional tax preparer with applicable Schedule Cs showing a profit was made.
Is there a cut-off point as far as the age of the car with regards to financing?
Yes. Most dealers will not assist funding a loan for any vehicle over seven years old.
How are bad credit auto loans funded?
It’s best to receive funding of your loan through a franchised dealer as they are held to higher standards. Usually poor credit auto loans funded by such a dealer are later assigned to a finance company. If you purchase your car from a “Buy Here/Pay Here” car dealer, a third-party payment processor will usually service the loan.
The above questions should at least provide a basic understanding of how to proceed if you’re interested in obtaining a bad credit car loan and motivate you to pursue this course of action should you currently need one.