Frequently Asked Questions on Car Finance for People with Bad Credit

Do you think you will be turned down for car finance because of your credit rating? If you do have poor credit, it is certainly true that you will struggle a bit more to obtain finance. However, there are some great bad credit auto loans options out there that you may wish to access instead. Below are some of the most commonly asked questions about it.

What Are Bad Credit Auto Loans?

Basically, Bad Credit Car Finance is car finance designed specifically for people with bad credit who get turned down by the prime market. The prime market includes credit unions, banks and lenders who are associated with the major car manufacturers.

Who Can Get a Bad Credit Auto Loan?

Anyone can get this type of loan. However, they are specifically designed for those with a low FICO score, those who have been declared bankrupt, those with a low income, those who have had vehicles repossessed and those who don’t have a deposit.

Who Cannot Get a Bad Credit Auto Loan?

Usually, the only people who can’t get these loans are those without a job, those who are not legal and permanent residents of this country and those who are under 18 (21 in some states).

What Qualification Criteria Are There?

Usually, the acceptance criteria are:

• Being at least 18
• Having a $1,500 minimum monthly income
• Having a valid and active bank account
• Be a legal and permanent resident of this country
• Having proof of residency
• Having a telephone number

How Can I Prove my Income?

Generally speaking, lenders will accept different things as proof of income. Bank statements that show your salary is being paid or your pay stubs may be valid. If you have income by being self-employed, your tax return statement may also be acceptable.

Can I Finance Any Vehicle?

Not really. Most lenders will only provide finance on a car that is no more than seven years old. This has to do with vehicle depreciation. If you don’t make repayments and the car has to be repossessed, the lender would struggle to get their money back if the vehicle is too old.

Where Does the Money Come from?

Generally speaking, good bad credit auto lenders are franchised dealers. This means that they have to uphold some very high standards. The dealer will usually fund the finance itself and this money is then assigned to a specific finance company. This means that it may look as if you have purchased directly from a dealer, but there is actually a third party processor involved for the payments and they service your loan.

Hopefully, the above has given you a greater understanding about the world of bad credit car finance. If you feel you have poor credit, you may want to obtain a copy of your credit report first to check on this, before you apply for any finance. The more applications you put in, the worse your credit score will become, after all.