Qualifying for a Bad Credit Auto Loan in Maryland or Virginia
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The lowest qualifying credit score for a bad credit auto loan is typically 600, but someone with a lower credit score may still qualify for one. There are also situations where someone with a credit score that’s higher than the minimum required may not be approved.
A successful auto loan application is based on more than just your credit score. There are numerous factors at play that can help or hurt your chances of being accepted.
What Is Pre-Qualification?
Pre-qualification is a service provided by lenders in which they conduct a preliminary review of your application, showing you how a lender will judge your application. They may even be able to advise you on ways you can improve certain components before submitting it again officially.
What Factors Influence Your Eligibility for a Bad Credit Auto Loan?
Credit Score
While your credit score isn’t the only component of your bad credit auto loan application, it is the predominant factor in many cases. Your credit score tells lenders how likely you are to be reliable in the future and make your monthly payments on time. A lower credit score represents a higher risk level for lenders, which can result in your application being rejected or your loan approval coming with higher interest rates.
Credit scores can be frustrating for low credit car shoppers because there are no quick fixes. It takes years of making monthly payments on time to boost your credit score – which is time car shoppers who need reliable transportation fast may not have.
At Easterns Automotive, our auto loan team can advise you on tips to bolster your credit score while providing you with alternative strategies to increase your application’s chances of success.
Income
While a bad credit score can suggest a borrower is potentially unreliable, proof of employment wages or salary provides grounded evidence of your dependability. Proof of current income shows lenders you have the means to fulfill your loan obligations. Typically, an applicant must make a gross income of at least $18,000 annually to qualify for a bad credit auto loan. You can learn more about minimum income requirements in our blog here[1] .
Current Debt Loan
Any monthly debt payments will impact your monthly income and potentially hinder your ability to pay regularly. This is why lenders often focus on the debt-to-income ratio when evaluating your eligibility, or what percent of your monthly income goes toward paying your current debt obligations, and whether there will be enough left over for your monthly car payment. If you have existing debts, they may weaken your application.
Down Payment
Making a larger down payment for your pre-owned car can offset the amount you have to borrow from a lender, making lenders feel comfortable accepting your application. It shows them that you won’t need to borrow much, and you have the funds to pay back what you do borrow. Even a downpayment as small as $1,000 can bolster your chances of securing a loan while also elevating the possibility of securing a lower interest rate.
Value of Car
It’s critical that your loan is not worth more than the car itself. Ideally, your application should have a low loan-to-value ratio.
Applying for a loan on an expensive new car may not be in your best interests if you don’t have a high credit score. However, applying for a loan to purchase a low-quality used car likely isn’t in your best interest either. Lenders are more willing to offer loans for vehicles with higher resale values just in case you default on your loan and they need to sell the car.
At Easterns Automotive, we offer fully refurbished, certified pre-owned cars that have been maintained to meet the standards of new cars. Most of our models are relatively new and have many more years of reliable performance to offer, meaning they can deliver long-term value for less.
Buy a Certified Pre-Owned Car in D.C. or Baltimore Without Worrying About Your Credit Score
Easterns Automotive is the dealership where “Your Job is Your Credit™”, which means you only need to have a steady income to qualify for a certified pre-owned car. Our team knows the stress many buyers are under and will work with you to ensure you get the dependable car you need at a great price.
Our auto loan team is always ready to use our relationships with banks and financiers to your advantage. The financing team at Easterns Automotive has years of experience guiding low credit car shoppers through every step of the loan process and will help you receive the favorable auto loan you deserve so you can afford a high-value, certified pre-owned vehicle.
Get assistance from a devoted financing expert online or at one of our dealerships in DC, Maryland or Virginia today.