4 Factors A Lender Will Consider When You Have Bad Credit

If you have bad credit, that doesn't mean that you can't get a car loan. Some lenders specialize in helping individuals with bad or poor credit scores secure financing for a new vehicle. Many of these lenders will look past your credit score and look at other factors to determine if they can give you a loan. 


First, they are going to look at your income and employment history. You need to have a steady source of income to get a loan with bad credit. That income could come from social security payments, child support payments, or a traditional job. You just need to show that you have a paycheck of some sort coming into your bank account each month.  

If you have a paycheck and source of income, you can prove that you have had that source of income for an extended period. If you have money coming in, there is a lender who will want to work with you.  


Next, they are going to look at what your debt-to-income ratio is. A lender will want to ensure that you have the wiggle room in your budget to afford to pay a car note each month. They will want to ensure that you have enough income, and the right balance of financial responsibilities, to handle paying for a car.  

Rent & Utility Bill Payment 

Third, lenders that are willing to work with individuals who have bad credit often look at other signs to determine how financially responsible you are. They may ask to see evidence that you pay other bills on time, such as rent and utility bills. If you are responsible with those bills, lenders will see you as more responsible. You will want to bring evidence that you pay your utility and rent bills. 

Down Payment 

Fourth, you will want to save up money for a down payment. Having some money for a down payment is yet another way to show that you are financially responsible. This is a great way to show that you will be capable of paying the bills. If you are able to save money, then you are more likely going to pay your car note as well.  

Vehicle Age 

Fifth, the lender will want to know what type of vehicle you want to purchase. The type of vehicle you want to purchase will impact their decision to offer you a loan. They may be more willing to lend you money if you are not purchasing an expensive vehicle.  

When it comes to getting a car loan with bad credit, you need to show that you have a steady income, work to keep your debt low, show that you pay your rent and utility bills, and save up money for a down revenue. Doing that can help you secure a car loan with a bad credit financing dealership that offers to finance to people who need it.