5 Reasons Why You Can't Get a Bad Credit Car Loan
January 10, 2008 - 12:32 AM EST
Take heart... Despite the scary title, this list should give you more confidence in applying for a car loan, even with credit challenges. To apply, fill out our free Fast Auto Loan Application, and we'll take care of the rest.
Many people wonder if they can get a car loan with blemishes on their credit report. It is not only possible, but quite common to get a loan for a vehicle with bad credit. However, there are few reasons that do prevent people from receiving automotive financing.
No License To Drive
While not having a license should be self explanatory, there are instances where people apply for a car loan without a driver's license. A bank is not going to going to provide financing for a car you are not legally allowed to drive, and a dealership will not let you test drive the car. More commonly, you may have a driver's license, but not from the state in which you currently live. If you have moved, it is important to be licensed in the state of your residence before applying for an auto loan. In this case, it does not matter if you have good credit, bad credit, or no credit at all. There is little advice to give other than get the proper driver's license.
No Job, No Car Loan
One of the factors that a lender will look at is the ability to repay the loan for which you are applying. If you do not have steady employment, there is no way to verify that you can meet the monthly obligation of a loan. Hopefully, if you absolutely have no source of income, you aren't applying for a car loan anyway!
As a side note, those self-employed and people who perform contract labor have a similar struggle. Your best approach is to provide enough documentation to the dealership or banking institution which proves that you earn enough on a consistent monthly basis to satisfy your loan obligation. This could include several months of bank records and cancelled checks, and any other documents that verify your source of income.
Recent Vehicle Repossession
If you have had a car fall into repossession very recently, you are going to have a harder time securing a loan for a vehicle. The reasons for this stipulation are complicated, but most simply, you have an outstanding debt to a previous lender that may or may not result in legal action against you. Once a lender repossesses a car, your debt is not forgiven. The lender will attempt to sell the vehicle, usually at or below wholesale prices, and has the option to force you to pay for the difference. Another lender will also have to consider whether or not they will have to repossess your vehicle as well.
If you are considering allowing a car to go into repossession, don't! Some lenders will allow you to refinance a car loan for a longer term, which will lower your monthly payment. You may also be able to trade your vehicle at a dealership for a vehicle with a lower monthly payment. Both options are better than having to make a payment on a vehicle that you no longer own.
Too Young To Get An Auto Loan
A car loan is a legally-binding contract with a lender. If you are under 18 years of age, you are not going to be able to get a loan for your vehicle. The only exception to this rule is if you are declared an emancipated minor, where under certain circumstances, an individual under the age of 18 is allowed to assume financial responsibility.
You Didn't Apply For A Car Loan
It may sound strange, but in all seriousness, not applying for a loan through services like AutoApproved is the number one reason why people with credit challenges do not get a loan for a car. It can be a difficult task to identify which lenders and car dealerships are willing to help, and which ones are not. We have already done that. When you apply for auto financing, we take care of identifying the best resource for your needs.
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