Loans for people with bad credit are categorized as subprime loans. They are particularly offered if your FICO credit score is below 640. When it comes to subprime car loans, the lenders are either public-owned or private-owned. Some of them offer the deals directly to you. But you have to bear with its process which consists of a lot of paperwork. Most of them direct the offers through franchising with car dealers.


Because subprime loans are associated with bad credit and high risks, it is only natural that lending companies and even the online lenders require documents that would help prove your financial capacity and residence. While many of them do not require your credit report because as a matter of fact, it is your current financial condition that is important, some of these lending companies may require you documents indicating your payment history on something, say, apartment rentals, or home financing, etc. This payment history is not available on your credit report.

Interest Rate for People with Bad Credit

From the beginning, you have to understand that unsecured or subprime loans come with interest higher than secured loans. But you may ask, “How high will be my interest?” Honestly, the interest rates are not fixed and they are influenced by a lot of factors. There are several levels on every program. After all the factors are considered, the interest rate will range from 25% to 30%.

Edge of Car Loans for People with Bad Credit

True, if you opt for “buy here get here” policy from car dealers, you have to accept the truth about those cars dealt—they are already at their oldest condition. Many of them have had car crashes but repaired. Cars that you can choose from are limited and you cannot expect that they are still at their prime condition. In fact, you cannot expect that the cars are still in better condition.

This is where car loans for people with bad credit take leverage. Despite the documentation required, you know that you are getting real value for your money as the car you will be getting is still at its better condition.