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What to Expect when You Apply for an Auto Loan with Imperfect Credit


If you have imperfect credit and you need to buy a car, applying for an auto loan can be stressful. This is especially true if you're unsure about where to go for financing. After all, you don't want to waste a lot of time filling out paperwork only to be turned down.

The good news is that there are lenders out there that are able to work with most types of credit. These lenders, called special finance lenders, look at factors beyond your credit score in order to approve you for a car loan. And because these lenders will be concerned with things like your job, income and residence, you should be prepared with certain documents.

Standard Requirements for Auto Loan Approval with Imperfect Credit

Apply for an Auto Loan with Imperfect Credit

Special finance lender requirements can vary, but there are a few stipulations that are fairly standard. Basically, these lenders need to see proof that you are capable of paying back the loan. This will help to offset the risk posed by your imperfect credit.

  • Recent Paycheck Stubs: These lenders will need to verify that you earn a qualifying income. Typically, they want to see that you bring in at least $1,500-$1,800 (pre-tax) per month. Also, you will have a better chance at approval if you've had the same job for at least six months.
  • Utility Bill: This bill should be addressed to you and will serve as proof of residence. Stability is important when it comes to your residence because it can offset lender risk. So, it's also helpful if you own your own home. Or, if you have lived in the same rented place for a year or more, this may also be a mark in your favour.
  • Your Valid Driver's Licence: This will prove your identity and is necessary when it comes to getting insurance coverage. This licence should belong to you, bear your correct address and not be expired.
  • Phone Bill: The lender will need to know that you can easily be contacted. Your cell phone contract should be with a major carrier, and pay-as-you-go phone plans are not accepted.
  • Personal References: Usually, special finance lenders require applicants to provide a list of at least six references. People on the list can be friends, family members or co-workers who have known you for a long time. You will need to include their phone numbers and current addresses. Also, you should obtain their permission before including them (as they may be contacted by the lender for verification).
  • Again, exact requirements can be different, depending on the lender. But gathering these items will be a good start.

    How Financing a Car with Imperfect Credit is a Little Different

    The best way to go about financing a car with imperfect credit is to go through the right kind of dealer. Certain dealerships have connections to these special finance lenders. These dealers also have experience with buyers who have less than perfect credit.

    When you visit the dealership, you will meet with a finance manager first. They will go over your application and determine which of their lender partners will be willing to work with you. The lender will look at your credit, income and existing bills and if you are approved, come up with a payment range. You will then be shown the cars on the lot that fit into this approval.

    While it may limit your options, this arrangement will help you to be successful with your car loan. Your price range will be determined by a monthly payment amount that will fit your budget. Ideally, you'll be purchasing a car that you can realistically afford. So, you should be able to make all of your payments on time and improve your credit over the loan term.

    Free and Quick Assistance for Car Buyers with Imperfect Credit

    Finding a dealership with special finance lending connections can be difficult if you're searching on your own. But Canada Auto Loan can simplify the process by matching you with a dealer right in your area. For no cost, we'll help you get a better chance at auto loan approval. Applying with us also comes with no obligations.

    It's easy to see why thousands of car buyers with imperfect credit have trusted our service. Find out for yourself by taking two minutes to fill out our simple and secure online application. If you start today, you could be driving tomorrow.