What is special financing and could it help me buy a car?

Driver behind the wheel thanks to special financing


Special financing is a term often used to describe auto loans for consumers with bad credit,* which can include people who have been through bankruptcy or repossession, and those with limited credit histories.

There are plenty of companies in the auto finance industry willing to accept applications for subprime loans, so if your credit is poor, there may be a lender ready to offer you the financing that helps you get on the road.

First of all, keep in mind auto loans for people in bad credit situations typically come with higher annual percentage rates than those offered to consumers with better credit, which is how the risk is balanced.

If approved, depending on factors like loan amount and the type of car they want to buy, many people will opt for a used vehicle instead of a new one.

The main lending options for car shoppers seeking such financing include banks, credit unions, auto dealerships and online finance companies.

Dealerships are convenient places to shop for a car and arrange financing at the same time, but be aware of the difference between “buy here, pay here” dealerships, which don’t use a third party for financing, and other auto dealerships, that do.

“Buy here, pay here” dealers, who offer financing in-house, may have higher interest rates than other options. “Even if you have poor or no credit, it may be worth seeing if there is a bank, credit union, other lender, or another dealer that is willing to make a loan to you,” says the Consumer Financial Protection Bureau.

Many banks, credit unions and online lenders, such as RoadLoans, enable consumers to apply for preapproval before they shop for a vehicle. Getting preapproved is recommended by the CFPB as it lets car buyers compare any offers they receive, and helps them to save time and stay within budget at the dealership.


4 tips for buying a car with special financing

1. Check your credit history
Look at your credit history reports, upon which credit scores are based, to check for errors that could limit your access to credit, and dispute them if necessary. 

2. Work out what you can afford
Use auto loan calculatorsto estimate how much you may be able spend on a car, taking into account things like down payment and trade-in value, and what an affordable monthly payment might be. A down payment will be a requirement in many cases and can help a borrower by reducing the loan amount and loan costs.

3. Choose the right lender
Look for a lender that accepts applications from consumers with bad credit histories and has expertise in providing them with special financing. As a full-spectrum lender, RoadLoans has years of experience working with customers with challenging credit situations and offers the same, no-hassle process regardless of credit score.

4. Apply with a co-applicant
If you’re having trouble getting approved, consider applying for a joint auto loan with a co-applicant. Co-borrowers share equal rights to the vehicle and obligations on the loan, which is another way to reduce a bad credit risk.


Do I qualify, and where can I shop for a vehicle?

It won’t take long to find out if you can get special auto financing from RoadLoans. Our one-page application takes a few minutes to complete and you’ll get an instant decision, with multiple, customized offers for approved applicants.

If you’re looking for a used vehicle, you might be thinking about reliability. RoadLoans works with a network of trusted dealerships able to show customers select, high-quality models meeting our standards for age, mileage and financing, so they can shop with confidence and enjoy miles of happy motoring.

Apply for a car loan online.


* “Bad” or “Poor” credit generally is considered a FICO score around 600 and below by sources including the Consumer Federation of America and National Credit Reporting Association (reported by the Associated Press), Bankrate.com, Credit.com, Investopedia, NerdWallet.com and others. The Congressional Budget Office identifies a FICO score of 620 as the “cutoff” for prime loans. FICO scores are not the sole factor in lending decisions by RoadLoans.com and Santander Consumer USA.


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