Auto loans aren’t just for those with good credit. There are some very good auto loan companies out there that will lend you the money even if your FICO score is below 500. As if that weren’t enough, you should know that taking out an auto loan with a reputable lender can Improve your bad credit when it is established correctly and paid on time. With a low credit score, banks and lending agencies view potential car buyers as a risky investment and therefore need to guarantee non-traditional loans. In this article you can find some of these agencies that we have found to be best in their class for working with people that have low credit scores.
How to Get the Best Interest Rates Despite Low Credit
Many people have heard the words “bad credit,” but not everyone can understand the impact that credit problems can have when it comes to buying a car. Credit difficulties can hurt your chance of getting an auto loan because not all lenders can work with people with bad credit. There is one type of lender specifically dedicated to helping consumers with credit problems obtain financing: subprime lenders. A bad credit auto loan, also called a subprime auto loan, is a type of financing offered by lenders who know how much a loan can improve the quality of life for a consumer with credit problems. Sub-prime loans are great to re-manage if you have less than perfect credit or no history. However, if you don’t know where to look, it can be difficult to find a lender for this type of loan. The subprime loans are only offered by third parties, and they work exclusively through special financial dealers. However, not all dealerships have a special finance department, so you can’t just go to just any dealership and get a car loan as a borrower who is struggling with credit.
Direct Dealer Loans and Buy Here Pay Here Lots
When you visit the right dealership and work with a subprime lender, you have the advantage of having a lender who really sees your whole situation, not just a credit score. These lenders look at many factors other than your credit in order to assess whether you qualify for an auto loan. Before you go to a dealer and ask for a loan, it is important to know what your credit is and not base all your knowledge of your credit situation on what the lender says. Two of the most important things you can do for yourself are to get your credit score and keep track of what is on your credit reports. You can get a free copy of your credit reports from each of the national credit bureaus once every 12 months, and there are several ways to find your credit score. Knowing your FICO credit score, which is the version most used by lenders, can help you research the interest rates and loan terms that are generally available to people in your credit score range. In this way, you can familiarize yourself with your credit situation and you will know what offers are fair and appropriate. Also, one of the advantages of a bad credit car loan is that it can help you improve your credit score so that you can qualify for an even better loan in the future.
Dealership Loans are Not the Best Option
We do not recommend financing through a dealer, as they often offer higher interest rates than other lenders. If your need for a car is not immediate, you should keep in mind that there are some things that can be done to improve your credit score before buying a vehicle. However, if you are in a rush to get a car but have a bad credit score, then you should consider one of these car loans below. Auto loans are secured, which means that the same car works as collateral in case you do not meet the monthly payments. The monthly fees and the annual interest rate are fixed and can be more or less convenient depending on your credit history as well as how much money you earn per month and other issues. Each lender will have their requirements, below is a list of the best lenders along with their requirements so that you do not miss the opportunity to obtain a good loan.
Expect These Minimum Requirements
To get a loan with any of the below lenders you must have a full-time job or a guaranteed fixed income of at least $1,500 per month. The good news is that if there is a bankruptcy on your record, Auto Credit Express can help you secure a loan. Initial down payments are typically $500+ depending on the total cost of the vehicle your looking to purchase.
Ideal for Locating the Best Vehicle Pricing is Auto Credit Express
Auto Credit Express has one of the best reputations in the low credit loan industry, reflected in excellent customer reviews. The downside to Auto Credit Express is that, like many loan agencies, it doesn’t approve loans that go through private sellers. Buyers will have to go through a dealership to find their vehicles and secure their loan through Auto Credit Express. Auto Credit Express will automatically connect you with a local dealer so you can find the right vehicle for your needs and budget. Although the application itself takes less than three minutes to complete, buyers should expect to spend some time on the phone talking to an agent who will help them find the best deal available.
Best for Car Refinancing is LendingClub
LendingClub specializes in personal loans, but offers solutions for people who want to refinance their auto loans. People often refinance a car loan for a lower monthly payment, but it extends the life of the loan. To qualify for an auto loan refinance with LendingClub, the vehicle must be no more than 10 years old or more than 120,000 miles and it must be a personal use vehicle. Additionally, the applicant’s original vehicle loan must be at least one month old, have a minimum balance of between $ 5,000 and $ 55,000, and a minimum of 24 months of payments remaining. Interest rates can go up to 35.89%, so buyers should read the terms and conditions of their loan before signing. The response can come within the hour of submitting your application and your loan can be financed within seven days of approval. Applicants who have a cosigner have a higher chance of being approved for this loan, as well as a lower interest rate.
Best Dealer Network is Capital One
If you have a minimum monthly income of $1,500 to $1,800, a loan through Capital One may be the right option for you, depending on your credit score. But it doesn’t come without a warning. The vehicle purchased must be a 2009 model or later and have less than 120,000 miles. Also, if the applicant has an existing Capital One account, it must be in good standing. The biggest downside to securing a bad credit car loan through Capital One is that the issuer’s online pre-approval tool can be misleading. While an applicant can be pre-approved for a certain amount, this does not explicitly translate into a loan approval. You can go through the pre-approval and auto search process and find a vehicle that works for you, only to find out in the end that you don’t qualify for the loan. This could be a contributing factor to Capital One’s low customer satisfaction rating, which in 2019 only earned two stars out of five in 170 reviews, however those who were able to establish a loan with Capital One generally feel positive about this lender and like seeing their loans along side their other existing Capital One accounts in the mobile app.
Best for Instant Approvals Was CarFinance.com
To qualify for this loan, the buyer’s credit scores must be at least 500, the potential vehicle must be 2011 or newer and have less than 140,000 miles. If approved, CarFinance.com will issue a financing certificate that you can use as cash at the dealership. They also offer refinance options for those with less than stellar credit. A great advantage of CarFinance.com is that you will have an answer as well as the terms and conditions of your loan within 30 minutes during business hours. If potential buyers are interested in purchasing a truck, take a look at the ineligible makes and models before applying, as only light duty trucks for personal use are eligible for your loans. There are no fees to apply, however CarFinance.com only has a one star rating with the Better Business Bureau.
Carvana Ranks #1 for Best Customer Satisfaction
Carvana allows you to pre-qualify for a vehicle before starting your search, which is a huge time saver for potential buyers. The terms and conditions are valid for 45 days, leaving buyers plenty of time to search. Best of all, it’s a smooth credit check, which means it won’t affect your credit score when you go through the pre-approval process. There is no minimum credit score to qualify with Carvana, however you cannot have any bankruptcies on your record, and you must earn at least $10,000 annually. Down payments depend on the vehicle, your credit score, and the term of the loan, however Carvana has a helpful list of ways to meet your down payment requirement on its website, including the ability to trade in your current vehicle. Buyers cannot use their loan pre-approval to purchase vehicles outside of Carvana, but if buyers have any financing available through a third party, such as a bank or credit union, that loan can be combined with financing received from through Carvana, which makes it an adaptable option for many buyers. Carvana has an A+ rating from the Office of Good Business Practices.