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What is credit amnesty for car loans?
I have poor credit, and I'm looking to buy a car, which isn't the easiest thing in the world. However, I've learned I can get a car loan with credit amnesty. I'm not sure what that means, though, and nothing I find gives me a clear answer. What is credit amnesty?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Credit amnesty for a
car loan
is a term used by certain lenders to signify that they will work with customers with bad credit.This is a way for you, as a poor credit applicant, to access car loans from certain lenders. A major drawback of using credit amnesty for a car loan is that you will probably have a high-
interest rate
.If you have poor credit and want to work with a lender that practices credit amnesty, you typically have two options:
- Subprime lenders, which many dealerships work with for bad-credit customers
- Proof of residence
- Proof of income, usually $1,500 to $2,500 a month minimum
While credit amnesty car loans can help you get a loan, your rates will likely be much higher. If you eventually rebuild your credit, you should refinance as soon as possible to save money over the life of your loan.
Finally, if you’re approved for a credit amnesty car loan, keep in mind that the lender will also require you to have
full coverage car insurance
, so factor that into your budget.Best of luck with getting your loan—you’ve got this!
MORE: Does refinancing a car hurt your credit score?
View full answer
- Gregory R.
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