Each day, thousands of Americans with less than ideal credit get denied for an auto loan. If you’ve been turned down for an auto loan from a subprime lender, you may be lost as to where to go next. Here are some things to consider:
The major question you should be asking yourself is why you were denied an auto loan in the first place. Subprime auto loans were made to help people with less than perfect credit, bankruptcy, or no credit get an auto loan.
However, lenders cannot approve all applicants. Finding out you’ve been rejected by a lender can be tough, but it also provides you an opportunity to know what aspects of your credit need work.
Lenders are only concerned about a borrower’s ability to repay the full loan amount back with interest. Factors such as your income, job stability, and address/residency history play a larger role in the approval process than most people think.
Most lenders also look for borrowers with an income of $1,500 per month or more. You will usually be required to have at least 6 months of employment history at your current job, proof of residency, a phone number, and driver’s license.
If you feel that your credit score played a role in your rejection, you can begin searching for a cosigner.
Often times, consumers that were denied an auto loan from a subprime lender will begin to turn to buy here pay here dealerships. These dealerships typically do not check a buyers credit score or report. This can also mean that your positive payment history will go unreported to the 3 major credit bureaus.
There are some major downsides when it comes to working with a buy here pay here dealer. First and foremost, most of these dealerships are extremely strict on payment plans, with some buyers making auto payments twice per week.
If you are late by 1 day on your auto loan payment, the dealership could repossess your car.
If you want to avoid buy here pay here dealerships, your best bet is to save up and purchase a car from a private seller. Make sure you get the car inspected thoroughly by a mechanic to ensure its reliability.
Remember that not all dealerships work with specialty lenders who help consumers with less than ideal credit. If you are looking to buy a new car but are in need of financing, CrediReady can help. Our nationwide network of trusted dealers and verified lenders work with buyers in all credit situations. Take a moment to fill out our free no-obligation loan inquiry form and start shopping for your dream car today!