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

Special financing consumer sitting in 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 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 the financing that helps you get on the road.

First of all, keep in mind vehicle 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 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 approval 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 calculators to estimate how much you may be able to 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.
  1. 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. We also do our best to work with consumers who need a loan with a low- or no-money-down requirement.
  1. Apply with a co-applicant
    If you’re having trouble getting approved, consider applying with a co-applicant for a joint auto loan. 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 for a loan?

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 receive an instant decision, with multiple, customized offers for approved applicants. If you’re currently going through the bankruptcy process, bear in mind that we only accept applications from consumers once their bankruptcy has been discharged.


Where can I shop for a great vehicle?

When you’re looking for a reliable vehicle, it’s good to know that RoadLoans works with a national network of trusted dealerships. These dealers are 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 ahead.

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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