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Qualifying for a Bad Credit Auto Loan

Those that have less than perfect credit scores can apply for a bad credit auto loan. They usually find it difficult to get pre-approved auto loans through the normal channels such as local banks, credit unions, lending arms of auto manufacturers such as Ford credit and GMAC. Many financial institutions are wary of lending to those with less than perfect scores. These people have seen their credit scores dip due to bad debts, defaults on mortgage and other loan payments, foreclosures, bankruptcy, previous vehicle repossession and many more reasons.

Pre-requisites for bad credit auto loan

Those who wish to qualify for a bad credit auto loan should be citizens or legal residents of the United States. Those presently residing in the United States can also apply. Military personnel that are currently residing in United States can also apply for bad credit auto loan, but not those that are residing outside the United States.

You should be able to obtain automobile insurance to qualify for bad credit auto loan and should have a working phone number as well as proof of residence. Proof of residence can be shown through utility bills for the purpose of qualifying for the bad credit auto loan. You should also be able to prove that you are currently employed and have a fixed income that would cover the down payment as well as monthly payments for the bad credit auto loan.  These can be your salary stubs or bank account statement for the checking account. If you have steady income but can’t prove the same, then you wouldn’t qualify for the bad credit auto loan. If you have a gross monthly income of $1500 and above, the lenders for an auto loan would consider you.

Applying for a bad credit auto loan after vehicle repossession

If you had vehicle repossession less than a year ago, you can still qualify for a bad credit auto loan provided that the repossession wasn’t included in the bankruptcy. Many of the bad credit auto loan lenders would also require that you make a bigger down payment for the bad credit auto loan (ranging between 20-50% of the loan amount). The choices for the cars may be also limited in these cases.

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