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federalautoloan.com was established upon common American principles – those of honesty, hard work, and a helping hand for one’s fellow man. And here at Federal Auto Loan, just like the freedom and liberty with which this country was founded on, we believe there to be certain truths in the world of financing that are self-evident: that at times, people go through financial hardship… and simply need a little help to get back on the right track; and that poor economic situations often take a serious toll on the financial prosperity of many individuals. It is for this very reason that, here at Federal Auto Loan, we have developed a consumer connection program designed specifically to lend people a “helping hand,” and assist them in getting connected with the bad credit auto loans they need.
Bad credit auto loans aren’t like traditional car loans. There are a number of different requirements associated with bad credit auto financing that you’ll need to meet. And because not every car dealer has a special financing department, finding a subprime lender to work with is often a difficult task. Bad credit car loans are designed for buyers who have less-than-perfect or no credit. And they’re great for getting your credit back on track and getting you in the driver’s seat of a new or used car.
So where do you begin when it comes to bad credit auto financing?
Well, if you’re thinking about applying for a bad credit auto loan… the first step is to do a little research and prep work. You might already have an idea of the car you want to buy, but the Consumer Financial Protection Bureau (CFPB) recommends that you take a look at your financial circumstances before shopping for a vehicle. So to start, make sure you have these three bases covered:
Dealing with bad credit can feel crippling. But, when it comes to getting a car loan, a poor credit situation doesn’t have to disqualify you. There are steps and processes that can get you with the right lender and dealer that will work with your situation. So, don’t give up. Start the process by finding out the standards that most lenders and dealers require.
Some basic standards include:
From there, dealers’ and lenders’ requirements will differ some. You will have to cover their specific standards when working with the dealer’s in-house, finance manager or with the outside, subprime lender. Some other typical requirements include:
Bad credit comes in all different shapes and sizes, but the primary differentiators are categorized by how you ended up with a poor credit score: circumstantially or by choices. Thus, the two primary categories for bad credit are situational and habitual. When trying to get a bad credit car loan, dealers and lenders will assess your credit predicament to determine which category fits you. That decision will dictate whether they will give you a loan or not. However, while one of these categories is definitely preferred, both still present the possibility of receiving a loan. Let’s dive into both a little deeper to give you an idea of where you land.
Are you currently living with bad credit? If you’re ready to start fixing your credit, getting a car loan is a great place to start. To begin the process of acquiring a bad-credit car loan, it’s important to know what your credit score is and why. You can find out your current credit score using Experian, TransUnion, or Equifax; they provide free credit reports once every 12 months.
Once you’ve acquired your score and credit report, it helps to know why your score is what it is. The best way to figure that out is by understanding how credit scores are formulated. According to myfico.com, credit scores break down into five categories with percentages of importance:
When working with bad credit, there is one primary hurdle that you’ll have to get past initially in order to get an auto loan: the application. With many lenders, their applications will automatically drop/disqualify anyone who has a credit score that’s below a certain marker. So, it’s typically best to find lenders who specifically state that they approve bad-credit loans or use a service like Federal Auto Loan that can connect you with several bad-credit lenders who are ready and willing to work with individuals with poor credit. The truth is that a low credit score does present more challenges for buying a car, but it doesn’t mean that you absolutely can’t; there is still potential depending on your situation and the lender you find. You will have some extra and/or different steps that you’ll have to take, but to drive your own car, most people would consider the extra effort more than worth it.
Oftentimes, there are subprime, auto-loan lenders who are willing to work with people who have not-so-good credit. They look at other factors that can qualify a person for receiving a loan; factors like current and past employment along with current income level. And, they’ll look at why your credit is where it is as opposed to just seeing the number and saying no. Finding one of these lenders is your first step in the car-buying process. As someone who currently has bad or low credit, it’s important to reframe your thinking on car-buying as you enter this process. Your primary goal is to get a usable, trustworthy vehicle, so, your research does not start with looking up the exact vehicle you want; it starts with figuring out your budget and finding out what financing is available for you. Then, once you get a bad-credit car loan in place, you can begin looking for a vehicle that will best serve you.
The benefit of using a consumer-connection service like Federal Auto Loan is that the initial research for lenders is done for you. Plus, with Federal, you know that your information will be passed onto dealers/lenders who will at least review your application. Federal doesn’t reject or disqualify any legitimate applications. We make sure your information is passed to lenders that fit your situation regardless of how low your credit score may be.
It’s always best to have multiple options in any buying situation, including the auto loan market. By having more options, you get to decide, you do not have to work with one dealer because they’re your only choice. With Federal Auto Loan, we expand your ability to reach lenders and/or dealers in your area.
Then, your ability to have multiple options depends on if one or more dealers review your application and choose to approve you. Unfortunately, we can’t guarantee approval, but we can guarantee that your information will be passed on for review. You get to start with a door open as opposed to shut in your face with one glance at your credit score, and we know that’s a welcomed change for most bad-credit car buyers.
When you’re faced with bad credit, finding a financer that will work with you can be very challenging. And, although getting approved with your current bank or credit union can be difficult, it’s worth asking. If they decide to work with you, awesome! If they turn you down, don’t give up. There are other options for people with low to bad credit.
One option that tends to be successful is finding a local dealership that offers special financing for poor credit. Subprime lenders are usually more willing and accustomed to working with people who have bad credit. Oftentimes, the primary issue here is finding one of these dealerships/lenders.
At Federal Auto Loan, we know how difficult it can be to get the financing you need when you’re struggling with credit. That’s why we want to help you get started today. We work with a nationwide network of dealers that know how to handle unique credit situations. Let us help you find a car dealership for bad credit near you. Get started by filling out our no-obligation, free auto loan request form now.