Last Updated on
If you want to get the best bad credit car dealership, you first need to go through online auto lenders before approaching the car dealers.
Online auto lenders will help you get the best auto loan deal, after evaluating multiple dealerships and direct lenders. This is far better than approaching a dealership first, where you’ll likely get marked-up interest rates.
Hence, your first concern is to find the best online auto lender, who will help you get the best bad credit car dealerships.
Follow this simple, 6-step guide featuring the key aspects that will make your search successful.
Step 1: Understand How Your Credit Score Will Affect Your Car Purchase
If you have a 600 credit score or less, you have bad credit. And that will play a significant part in determining your cost of purchasing a vehicle.
Obviously, having bad credit, you’ll likely require an auto loan to acquire a car from a bad credit auto dealership. Hence, your credit score will influence the interest rate you get on that auto loan.
First, understanding that you have bad credit is just the start. When you dig deeper, you’ll find that, different classifications exist for various categories of bad credit:
- nonprime borrowers have credit scores between 601 and 660
- subprime borrowers have credit scores between 501 and 600
- deep subprime borrowers have credit scores below 500
That means having bad credit isn’t the end. The actual level of bad credit can vary from one person to another.
But how much exactly will your credit score influence the interest rate?
Due to your bad credit, you’re not likely to get the average annual percentage rate (APR) for all borrowers of 18.2%. However, you can be fortunate enough to get something better than the average annual APR of borrowers with a score of 630 or lower: 22.2%.
Here’s how that works out:
- the average used car buyer having a nonprime credit score can get a 9.29% auto loan annual interest rate
- a subprime buyer can get an average 15.72% interest rate
- deep subprime buyers can get a 21% interest rate
If you don’t know your score or you’re unsure about your overall credit standing, use this free credit score checker:
Step 2: Consider Your Capacity to Handle the Monthly Payment
You must know exactly how much you’ll pay every month to the bad credit car dealership and for how long.
Fortunately, this is one aspect where you have the greatest control.
Your loan interest rate is, in most part, set in stone; but you can choose how much to pay every month based on how much money you borrow to buy a car.
Going for a lower loan amount is a far better way to get lower monthly payments, compared to putting a down payment on a higher loan amount just to get lower monthly payments. You probably don’t have enough cash for a down payment.
One other option you might consider to get manageable monthly payments is car balloon financing. Here, you make lower monthly payments for several months and eventually make a lump sum payment in the end. However, this option is only good if you expect to get a significant income when the lump sum is due, or you manage to save enough during the initial low-payment months.
Step 3: Be Flexible on the Type of Car You Want
If you want to avoid costly financing and even to succeed in getting an auto loan from a bad credit car dealership, you must be flexible on the type of car you want.
As you already know, the type of car you go for will influence the amount of money you need. Generally, a used vehicle will be the cheaper option compared to a new one.
You have to choose from a whole range of brands that vary in performance and features, including: Ford, Toyota, Chevrolet, Honda, Nissan, Jeep, Hyundai, Subaru, Kia, GMC, Ram, Dodge, Mercedes-Benz, Volkswagen and BMW, Acura, Alfa Romeo, Aston Martin, Audi, Bentley, Buick, Cadillac, Chrysler, Ferrari, FIAT, Genesis, INFINITI, Jaguar, Lamborghini, Land Rover, Lexus, Lincoln, Lotus, Maserati, Mazda, McLaren, MINI, Mitsubishi, Porsche, Rivian, Rolls-Royce, Tesla, and Volvo.
That goes hand-in-hand with an assessment of the vehicle design: crossover, SUV, sedan, hybrid/ electric, luxury, convertible, minivan, coupe, truck, diesel, wagon, and hatchback.
If you’re thinking of the monthly payment, you probably don’t want a brand or design that will require higher monthly maintenance costs, further burdening your finances.
But there’s more to it than just that.
A bad credit car dealership will also consider the vehicle’s characteristics when deciding whether to approve an auto loan or not. This includes such things as a car’s mileage and age. Two cars may have exactly the same price, but one having greater mileage than another. A subprime lender will likely approve the one with lower mileage.
If you truly want approval for your auto loan to get a car, then don’t be too particular about the type.
Go with what will get an OK from lenders.
Also, if you’re looking to avoid down payments or higher monthly payments, 0 percent financing car deals from dealerships shouldn’t be in your plans. These are subsidized interest rate promotions, which typically have term limits of no more than 24-36 months. As you know, shorter terms mean higher monthly payments.
What you can check out for are car rebates, bonus cash, and special APR offers. Such incentives lower your cost of buying a new car. But they vary from region to region, and change from month to month. So, you’ll have to check the latest offer.
Step 4: Leverage Your Documents to Get the Best Deal
Even with bad credit, you still have one more card to play to get a better deal from a bad credit car dealership: your documents.
Of course, you can’t change your documents, and you certainly shouldn’t alter them, but they can help make up for your low credit score.
Depending on the direct lender or auto dealership, and type of auto loan, you may be asked for:
- A copy of your up-to-date driver’s license, showing your current address.
- Your auto insurance card to prove you have car insurance.
- Personal reference like a relative, friend or acquaintance. Provide names, phone numbers and addresses. (This can help you get a guarantor loan/ co-signer loan.)
- Recent pay stubs/ pay slips, W-2/ 1099 forms, or bank statements/ job letters. (The amount of deposable income you have will help lenders see that you’ll repay higher loans consistently.)
- Working phone number, recent mail, utility bill, rental agreement or mortgage statement as proof of residency.
Provide current documents and give as much details as required.
Providing all necessary details will help you get an auto loan fast.
Step 5: Use an Online Lender to Find the Best Bad Credit Car Dealership
Generally, online auto lenders serve clients for new, used, refinance and lease buyout loans. You can even get bankruptcy auto loans. Most importantly, they’ll link you with superb bad credit auto dealers.
“But, will I get the best bad credit car dealerships near me? I don’t want to travel halfway across the country to get a great car deal.”
Yes, you can.
One great benefit of online auto lenders is convenience. They can link you with the best bad credit car lots in just about any US state, including: Vermont, Pennsylvania, North Carolina, New Mexico, Georgia, New Hampshire, Delaware, West Virginia, Colorado, Tennessee, Ohio, California, Maine, Texas, Oklahoma, Montana, Maryland, Illinois, Kansas, Missouri, Idaho, Connecticut, New York, Utah, Iowa, Wisconsin, Alaska, Rhode Island, New Jersey, Nebraska, South Dakota, South Carolina, Arizona, Wyoming, Massachusetts, Florida, Hawaii, Oregon, Louisiana, Washington, Virginia, Arkansas, Indiana, Michigan, Kentucky, North Dakota, Alabama, Minnesota, Mississippi, and Nevada.
“What about bad credit no money down car dealerships near me?”
Online auto lenders have networks of multiple types of direct lenders and auto dealers, as well as buy here pay here, no down payment, bad credit, and no-credit-check auto dealers.
Plus, you’ll get multiple auto loan types to choose from, including: used car loans, new car loans, trade-ins, refinancing, lease buyout loans, private party car loans/ person-to-person loans (buying vehicles from other individuals), no credit check car loans and motorcycle loans.
In this regard, three top online auto lenders have an impeccable reputation:
- myAutoloan has 451+ reviews on Trustpilot, with an A+ rating by BBB (Better Business Bureau)
- Auto Credit Express has 393+ reviews on Trustpilot, with an A + BBB rating
- MaxCarLoan received an excellent review on ConsumersAdvocate.org
Based on those details, you’re capable of making the best choice. You can start your search for auto lenders who will link you to a great bad credit car dealership right here:
|Lender||Loan Amount||APR||Interest Rate Type||Loan Term||Minimum Income||Geographical Location||Credit/ FICO Score||Minimum Vehicle Requirements|
|myAutoloan||$8,000 – $100,000||as low as 3.54%||variable||2 – 6 years||$1,800/month or $21,600/year||48 US states (not Alaska or Hawaii)||500+||125,000 maximum mileage, 10 years old or newer|
|Auto Credit Express||varies by lender||fixed||3 – 6 years||$1,500/month||US or Canada resident|
|MaxCarLoan||$1,000 – $30,000||8% – 40%||2 – 6 years||$1,000/ month||unlimited||300+||no limit|
Step 6: Use Your Consistent Payments to Get a Better Interest Rate
Even when you finally get a car from the bad credit car dealership, you still have one last option to reduce your auto loan interest rate, which will reduce your payments.
If you don’t know, paying your loan on time and in full is one of the ways you can turn your bad credit into a great credit score.
After making consistent payments for several months (about 18 months) you can qualify for a better interest rate.