Subprime Auto Lenders
If you have any background or experience with loans in the past, then you will know that a lot of it will be heavily based around your credit score. Most auto lenders will approve the potential clients who have good credit history, rather than the ones who have poor credit scores.
A person with a low credit score would be defined as a subprime borrower. This basically means that you don’t have the best history when it comes to credit. This label makes you look risky towards the eyes of certain auto lenders, and they may be hesitant to do business with you or may charge you a very high interest rate if they approve you for car loans.
Thankfully, there are still a lot of ways to get around your credit score to be able to get car loans and experience buying a car. We also have methods that you can follow if you want to improve your credit history to get out of the ranking of being a subprime borrower. To learn more, keep on reading this article to find out more about credit scores and subprime auto lenders.
What Does Subprime Mean?
Subprime is a term that is used regarding credit scores. If you are a subprime borrower, then that means you have a bad history when it comes to your credit. There is no set number as to what subprime is, because each state will vary on credit scores, so you have to check what a subprime credit score is for your area.
Generally though, anything that ranges about 550-620 would define you as a subprime borrower. This isn’t too
bad, as a poor credit score would actually be ranked at 550 and below, but this only makes you have a slightly higher chance of approval but you may get the same disadvantages as a person with poor credit, such as a high interest rate.
Go to a Specific Kind of Auto Lender.
Sometimes, you might be going about things the wrong way. If you go to a traditional auto lender, you may find that they will deny your car loan application right away, or they may ask you for a higher than normal interest rate because of your poor credit score.
This might mean that you are going to the wrong kind of auto lenders. You should stop trying to visit traditional auto lenders and finance companies and instead go and find subprime auto lenders.
Subprime auto lenders are one of your best bets if you are a person with a poor credit score. This is because they specialize in car loans for people with poor credit scores. Therefore, they will be much more willing to do business with you compared to traditional auto lenders and banks.
However, you should try to get quotes from several subprime auto finance lenders before settling on one. They may be charging different interest rates and fees, and you never know if one subprime lender will give you a better set of terms and conditions compared to the other ones.
You ought to take your time and compare the loans before you decide to apply.
Go to a Buy Here Pay Here Car Dealership.
If you haven’t had great luck with traditional or subprime auto lenders, then don’t worry you still have other options out there for you. One of the most common ways people with subprime or bad credit scores get car loans is by paying a visit to a buy here pay here car dealership in their area.
There are usually a lot there kinds of car dealerships, so you should not have much trouble finding one. These car dealerships are a saving grace to people with poor credit scores who are in dire need of a car as soon as possible.
Basically, the reason why a buy here pay here car dealership will be willing to work with you is because they don’t base the car loan approval off of your credit score. Instead, they will ask you some other questions about you that will help them decide if you are a person who is financially responsible and capable of paying back a loan.
They will ask you how much money you generally make in one month and how long have you been working in your current career.
This helps them determine about how steady are you when it comes to money coming in each month.
Additionally, they will also ask you for your contact details, such as your home phone number and your cell phone number. They will also require you to give them your current address. This is only to ensure that they will know how to reach you to remind you about a payment if it is late.
There is no need to worry though, as most of these car dealerships have a grace period when it comes to late payments, so they won’t come banging at your door if you’re just a day or two late. They will most likely just send you a text message or give you a call before they attempt to
Keep in mind that there are still things you need to consider when you get a loan from a buy here pay here car dealership. For one thing, they will be giving you a car loan for one of their second hand cars. However, these cars have been tested and are still in good condition, so you would not really be at a loss.
Although, you may have privacy issues, which is why it is important for you to know that they may install a tracking device into the car. This is just to know where to find the car to repossess it if you have missed several payments, once you have paid off your car loan to them you can ask them to take it out.
However, there are also a lot of benefits to getting a car loan from a buy here pay here car dealership. One of the most beneficial things that you get is that you get to choose some of the terms of the repayment schedule. This means that you can pick a short repayment period if you’d like or one that is as long as 7-9 years.
They just want to be sure that you are comfortable and capable of paying them back, which is why many of these car dealerships offer this option to their clients.
However, we would recommend that you choose a loan repayment period that is as short as possible that you are capable of, because you will be saving a lot more money in the long run because you would be avoiding those extra interest fees over the years, as each month will have another interest fee.
Enhancing Your Credit Score.
Now, if you want to avail of car loans that have low interest rates easily, then you will want to improve your credit score. Generally, there are lots of ways you can go about this. You can go to a credit repair service company to help get rid of some errors from your credit history but that won’t do that much right away. You need to take things upon yourself to improve it.
Fixing financial habits such as paying your bills late would help. Clearing out your debt from your credit cards and other dues would also be helpful. However, keep in mind that getting a good credit score can take a few years depending on your credit situation, so you need to be patient and stay financially responsible.
No matter what your credit situation is though, you always have options when it comes to car loans. You can choose from some of the methods above to help you get the car that you need right away.