You may not know where to find car financing if you’re dealing with less than perfect credit. Should you try to get a bad credit car loan from a bank or credit union, or is there another option?
Is a bank or credit union better for a car loan with bad credit?
Credit unions and banks are different in many ways, but both are direct lenders that you can visit to apply for a car loan. You can get pre-approved before you even go to a dealership and then purchase a vehicle based on the terms given to you.
Here are some of the notable differences between banks and credit unions:
- Banks are generally larger credit institutions that are public and for-profit institutions. While this often gives them the ability to offer more services and loans at competitive prices, borrowers are often subject to stricter approval requirements and higher fees.
- credit unions are generally smaller lending institutions that focus on the member experience because they are not-for-profit and member-owned. This usually allows them to offer lower approval standards and lower interest rates on loans and credit cards. However, you often need to become a member if you haven’t already before applying for a car loan (which may involve opening a savings account) and live in the area served by the credit union.
If you need a car loan for bad credit, it doesn’t matter if you’re applying through a bank or a credit union. Both places are direct lenders which traditionally require applicants to have good credit to be approved. You should always discuss your chances of getting a car loan with them, especially if you have an established relationship with them.
Ultimately, bad credit can prevent you from getting a car loan from a credit union or bank due to their stricter credit requirements. If so, you will need to find a alternative source of funding.
Special Finance Car Dealerships Might Be Your Best Bet
There are other lenders who are more willing to finance borrowers with bad credit. Subprime lenders are typically indirect lenders who rely on factors other than credit to approve applicants, such as income, work history, and residency stability.
Although you usually cannot contact a subprime lender directly and apply for a loan, they lend through some car dealerships. So, the key to getting financing from a subprime lender is to apply to a dealer who works with them.
Find a bad car loan
If you need a bad credit car loan, we recommend checking with your local bank or credit union to see if you are a member in good standing. Otherwise, finding a special financial dealership with subprime lending relationships might be your best bet.
Auto Express Credit can help you find a dealer that specializes in financing if you’re looking for a bad credit car loan. We work with dealerships across the country who team up with subprime lenders. We can connect you with a dealer in your area if you start the process by submitting our free and secure form. car loan application form in line.
