How to Prepare for Car Loans for Bad Credit

If you're thinking of buying a new or used vehicle with a car loan for bad credit, there are a couple of things you should do before you begin shopping for your next vehicle.

How do you choose a dealer who offers auto financing for poor credit scores? Is there any reason why you shouldn't jump in your current car and drive down to the local auto mall to shop for a car instead of visiting one of the many online car loan web sites? The bottom line is that this really depends upon your credit history and your FICO score.

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Bad Credit Scores Affect on Auto Financing

If you have a credit score (FICO or beacon, not VantageScore) over 640 and a fairly extensive credit history (that includes past automobile credit), you should be able to purchase a vehicle with a traditional prime or near-prime auto lender. But even if this is the case, you should still do some research on the internet.

If you have less than perfect credit, however, you may want to postpone that drive around town. Here's why: the bad credit buying process is much different. And just as the sub prime buying process is different, so is the dealer that can help you with car loans for bad credit..

The fact is, many dealers really don't want to deal with customers with poor credit scores. Auto financing with bad credit require more effort than regular loans. Dealers that decide to do special finance are responsible for more documentation and for establishing that the documentation is correct as well as verifiable. If anything goes wrong in the documentation process, the contract is sent back to the dealer with the dealer now holding the contract for the car. This means it's the dealer's money that's financing the vehicle and the dealer must now collect the monthly payments from the customer. Most dealers do not want to do this.

Secondly, as a car buyer with a lower credit rating, it's important to realize that a dealer's new and used car inventory also has to be adjusted for sub prime lending. The vehicles a dealer has in inventory have to meet lender guidelines in terms of mileage and year. The used cars also need to be purchased at or below NADA or Kelley wholesale, since bad credit car loan lenders base their "advance" (how much money they will loan a customer on a particular car) on these figures. New cars also have to be within a certain price range, since poor credit lenders are very strict about keeping your car payment within a specific budget range, based on your income. Without the right kind of cars purchased at the right price, the dealer can't sell any of the cars on the lot to customers.

Using Different Poor Credit Lenders

In addition to paperwork and inventory issues, there is the large number and diversity of sub prime lenders as well as the confusion that can happen when trying to understand the varying loan programs that they offer. Most sub prime lenders have at least five "tiered" programs and each program can have its own set of requirements. Without a knowledgeable special finance department and an experienced finance manager, keeping track of all the lenders and programs can be a nightmare.

Once you realize all this, you'll know why there's a good reason to visit a auto financing loan web site like We have helped literally thousands of people with poor, blemished, bruised and tarnished credit buy cars while reestablishing their credit (and raising their FICO score) at the same time. We have a national network of low credit car dealerships that specialize in car loans for damaged credit that can help you reestablish your credit while driving a new or low-mileage pre-owned car and get you back "on the road" to a brighter credit future.

AutoNet Financial is different than most online bad credit car loan companies as we offer free auto loans and credit services.