What is bad credit and can I get a car loan with it?


The definition of questionable means that the quality of something is up for debate. If a lender says your credit score is questionable, chances are they mean it’s bad, or at the very least, they’re hesitant to approve you for vehicle financing. Here is what most lenders consider bad credit and the auto loan options you may have.

Bad credit and auto lenders

Many auto lenders may consider bad credit as a borrower with a credit score below 660. The credit score levels, as ranked by Experian, the national credit bureau, are:

  • Super first: 850 to 781
  • First: 780 to 661
  • Not first: 660 to 601
  • Subprime: 600 to 501
  • Deep subprime: 500 to 300

Unprivileged and lower credit levels are when you start to enter bad credit territory and may struggle to meet the credit score requirements of traditional auto lenders.

This is because lenders look at your creditworthiness – your perceived ability to repay loans based on the information in your credit reports. Besides your actual credit score, there may be situations where items on your credit reports are what make a lender wonder if you are a good candidate for a car loan. These may include:

  • Past or active bankruptcy
  • A past or recent vehicle repossession
  • Recent missed / late payments
  • High credit card balances
  • No credit history

There are ways to get an auto loan with bad credit. However, your options may change depending on what makes your credit history questionable.

Doubtful auto credits

If your credit score is less than stellar, it may be time to consider these two loan options:

  • Subprime financing – Made through special financing concessions by risky third party lenders. These lenders can often help you with many unique credit situations, provided you can meet their requirements. A great option for new borrowers with slim records, situational bad credit, or consumers with older negative ratings.
  • Internal funding – May not require a credit check, and is done through Buy Here, Pay Here (BHPH) resellers. Typically, your income and the amount of your down payment are the most important elements of eligibility. Auto loans without a credit check may not repair credit and may carry an above average interest rate.

Both of these auto loan options are generally available for borrowers with credit problems. However, if you have more recent and serious defaults on your credit reports, a BHPH dealer may be right for you. Most traditional and subprime lenders generally do not approve of financing for borrowers who have gone bankrupt, repossessed less than a year old, or borrowers with multiple missed / late payments.

Bad Credit Car Loan Requirements

In many cases, your income and the amount of your down payment are the main factors in your overall eligibility for bad credit auto loans. Expect to need:

  • 30 days of recent computer generated check stubs to prove you have around $ 1,500 to $ 2,500 in gross monthly income. Borrowers without W-2 income may need two to three years of professionally prepared tax returns.
  • A deposit of at least $ 1,000 or 10% of the vehicle’s selling price. BHPH dealers can charge up to 20% of the car’s selling price.
  • Proof of residency in the form of a recent utility bill in your name.
  • Proof of a working phone (no prepaid phones), proven with a recent phone bill in your name.
  • A list of five to eight personal references with name, phone number and address.
  • Valid driver’s license with the correct address, cannot be revoked, expired or suspended.

Depending on your personal situation, you may need fewer or more items to apply for a bad credit car loan. However, having these documents ready before you go to a dealership can speed up the process!

Ready to hit the road?

With bad credit, finding a dealer who can help you with a car loan is easier said than done. Here has Auto Express Credit, we want this done for you through our coast-to-coast network of financing dealers.

Fill out our free auto loan application form and we’ll immediately get to work finding a dealership in your area who can help you with many difficult credit situations.


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