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



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 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 financing that will help 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. That’s 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, like RoadLoans, enable consumers to apply for preapproval before they shop for a vehicle.

How might that help? If approved, they can visit the dealership with their loan documents in hand, already knowing what they have to spend on a car – even with bad credit.


4 Tips for buying a car with special financing

1 Check your credit history
Look at your credit history reports to check for errors that could limit your access to credit.

2 Work out what you can afford
Use auto loan calculators to estimate how much you can spend on a car, taking into account things like a down payment and trade-in value, and what an affordable monthly payment might be.

3 Shop around for your financing
Apply with a number of lenders that accept applications for subprime auto loans.

4 Compare options and make a choice
If approved, compare the loan offers to see which terms best suit your circumstances. Evaluate the company, too, to make it sure its one you want to enter into a financial relationship with for several years.


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

RoadLoans understands that consumers have their own special auto financing needs, and we accept applications from people with all types of credit.

As an online lender, our process is fast and easy, no matter what end of the credit spectrum you find yourself.

The 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 car, you might be thinking about reliability.

RoadLoans works with a national network of trusted dealerships that are able to show our customers select, high-quality vehicles meeting our standards for age, mileage and financing, so they can shop with confidence.

Learn more about auto loans for bad credit situations, or apply for financing.


* “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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