Here at Youautomotive auto loans, we often receive comments from consumers who are looking for their next car. Typically, people who are looking for an auto loan tend to pick out a car first and look for financing second. This process may work for someone with good to great credit, but for many people—especially those with bad credit—the process works differently.
Take this customer who recently wrote to us about finding a vehicle:
“I'm looking for a dark purple car would love to get Camaro but I would be willing to get a different model like Impala or even an SUV but I can't afford a new one…”
To be clear, we are not a car finder or a finance company. We help people with bad credit get connected to local special finance dealers who can help people get the vehicles they need.
Why the Bad Credit Process is Different
Wanting a particular car is one thing, but when you have damaged credit, it's more important to get what you need—or what you can afford—rather than trying to find the exact car you want. This is due to the fact that when you are looking for financing with bad credit, you first have to get an approval from a subprime lender.
Subprime financing is typically needed when you have a credit score around 640 or lower. This type of auto loan is done through indirect lenders who work with special finance dealerships. Not all dealers have subprime lenders, so choosing the right one to meet your needs is important. Once you have found a dealer with a sub prime finance department, you will need to sit down with the special finance manager, fill out an application and submit the necessary documents.
You will need to provide:
- A valid driver’s license or state ID.
- Proof of income – your most recent check stub.
- Proof of residence – a current utility bill in your name.
- Proof of a working phone – a landline or cell phone from a national carrier, in your name.
- Six to eight complete references – including names, addresses, and phone numbers.
Once you have completed this process, the dealer will transmit your application and documentation to the lender. The lender will either approve or deny your loan request. If you are approved, the lender will transmit a “payment call” to the special finance manager with the program you qualify for along with any additional requirements.
Choosing Your Vehicle
Once the lender has approved your auto loan request, the dealer will present you with a list of eligible vehicles that you qualify for, based on the information from the lender. Then, you can test drive them and choose the one you like that best fits what you need.
The good news is your choice of vehicles will typically be restricted to those that are less than 10 years old and with less than 100,000 miles. It is also good to note that your loan term can vary depending on vehicle mileage and model year.
As you can see, when you are dealing with subprime financing, choosing a vehicle comes at the end of the buying process, rather than the traditional loan process where you choose your vehicle first, then get financed.