aThe credit crunch has eliminated all but a handful of Bad Credit SUB-PRIME, HIGH INTEREST auto loan banks around the country.  Car shopping consumers should be aware of the reality of trying to get an autoo with BAD CREDIT. Beware of dealers who promise to “GET YOU DONE” and then call back requesting more money down and a higher payment. This is a typical game desperate car buyers with bad credit often fall for. Don’t take a car off the lot without an approval letter in hand. Be ready for a 25% average  HIGH INTEREST RATES and HUGE cash down payment.

There are only about 5 banks: CHASE, Americredit, WFS, DRIVE Financial and Capital One currently offering auto loans to people with bad credit.  The dirty little secret of these type of loans is that MANY TIMES the BANK charges the dealership a FEE to take you and your BAD CREDIT auto loan onto their books. This is often referred to as a DISCOUNT on the cost of the car from the dealer to the bank. In the muddy-world of sub-prime loans, you are PAYING all or part of your DOWN PAYMENT to this bank so they are sure they will get paid; just in case you repo or fail to make all your payments. The most well-known SUB-PRIME auto loan bank still making bad credit loans is DRIVE FINANCIAL otherwise known as Santander. Google them. You will read what others have experienced in the sub-prime auto loan market.

Dealers despise the circumstances surrounding this type of loan, but for many clients it is the ONLY choice they have.  READ my 10 RULES to a BAD CREDIT SUB-PRIME AUTO LOAN before you sign the contract. For some of you a HIGH INTEREST 18% up to 29% is your only choice, however, dealers deal with different banks and your credit score will be the determining factor.  If you don’t have at least a 600 score, your only hope of a bad credit auto loan will be a ” Buy Here, Pay Here”  used car lot. At these locations you make your payment directly to the lot once or twice a month.  Operators like J.D.Byrider do a great job of maintaining the vehicles and reporting the payments to the credit reporting agencies so you actually get some benefit from a history of paying on time. However, many states have banned this type of bad credit auto loan option.

MYCARLADY’s 10 RULES to getting a bad credit sub-prime auto loan

  1. You MUST have at least a 600-650 credit score (under 600 go buy here-pay here or wait)
  2. You MUST have at least $2500 CASH DOWN. (Your junk, non-operable trade-in doesn’t count for more than $100.00 anymore.)
  3. You MUST have at least 1 year with the SAME EMPLOYER.
  4. You MUST have at least 1 year at the SAME Address.
  5. Make sure the car is not a SALVAGED or TOTAL loss Title.
  6. Make sure the bank is reporting ALL your payments to the credit reporting agencies accurately.
  7. Make sure there is NO PRE-PAYMENT Penalty (you don’t owe the remaining interest) if you pay the car off early.
  8. BE SURE you get GAP protection for the loan. (From the dealer or your auto insurance carrier.)
  9. Monitor your loan balance regularly to be sure all payments are reflected and no additional fees, forced insurance or misc. charges have been added to the balance.
  10. Ask if the car has a GPS or disabling device installed. This will make the car inoperable and provide a location tracker to repossess it if you fail to make your payment on time.

Want to know if you have the score before you go car shopping? Go to: and pay for the monitoring service so you get an idea what your score is or contact me and I’ll help you out, everything is private and confidential,,,

Sarah Lee is an automotive executive with 20+ years of experience. She writes about Cars, and is a staunch consumer advocate on car related subjects. Her company: MY CARLADY is a car buyer’s service committed to getting you the best deal on your next new or pre-owned vehicle. You can reach her at

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