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What Are Subprime Auto Loans?
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Subprime Auto Loans help you rebuild your credit report and get reliable cars fast with acceptable terms.
Here is how it works: Lenders give loans to people with a bad credit report.
So, If you have a bad credit score due to a financial emergency you can’t get a traditional car finance you must get special financing.
When Subprime can be beneficial:
- Choosing the best financial service for this special financing can help people get a reliable car fast
- Subprime car loans can help students and first-time car buyers
- These loans help clients improve their credit scores report
Subprime car loans usually have higher interest rates than prime loans because lenders see people with a bad credit score as a risk.
Avoid the headache of trying to find the right lender. Apply for a bad credit car loan with us today and we’ll match you within our trusted lending network instantly. Apply now!
When Are Subprime Auto Loans for me?
When you want a better credit score fast
Did you know that secured debts bear more significance in your credit report than unsecured debts? That’s why financial experts advise people with subprime and poor credit scores to apply for secured credit cards and Subprime Auto Loans.
If you’re tired of getting rejected by creditors anytime you want a mortgage or a bank loan, just apply for subprime auto loans. It might take you 12 or 24 months to repay the loan, but you’ll reap the benefits of an improved credit score for several years.
When you can’t afford a car lease
Sometimes leasing a car makes sense if your employer posts you to a new working station for a short period in a different state that’s far from home. If you’re a college student studying 100 miles from home, you need a car of your own. Why? Because studying for an undergraduate degree might take 3-4 years.
In this situation, leasing a car is unwise because the amount you’ll end up paying eventually can get you a slightly used car. It’s better to apply for subprime auto lenders because you gain a good credit history while boosting your credit score at the same time.
Pros of Subprime Auto Loans
- Enables you to get a decent used car – Just because you have a poor credit score doesn’t mean that you’re doomed to wrecked cars.
- Improves your credit rating significantly – You can improve your credit score by applying for a subprime auto loan. As long as you reimburse all your installments on time, your credit score improves monthly.
- Enables you to enjoy private transportation within your means – Subprime is ideal for first-time car buyers because you don’t need an excellent credit score to qualify. Car dealerships usually request for 20-30% upfront. If the asking price is within a college student’s reach, then the used car loan installments will be a piece of cake.
- Gives affordable car purchase options for people dealing with high debts – If you’re a single parent, then you understand how challenging it is paying for your home’s mortgage, utilities, and various loans by yourself. Signing up for a costly loan can push you into nasty debt cycles. However, you can still afford a car by applying for a subprime auto loan.
- Helps you to establish a long friendship with a good car dealer – Smart car buyers who establish friendly rapports with their car dealership staff have several advantages. If you inform a car sales rep about your savings project for a new car, he or she will set aside the best cars for you to choose from. Apply for a Subprime Auto Loan today!
Subprime Auto Loans FAQ’s
What does a subprime car loan mean?
This definition comes from the default credit rating system and subprime car market. Subprime credit scores range from 550-620. If your credit report falls in this range, then you qualify for Subprime cars.
How does a subprime auto loan work?
First, a car sales rep will request your credit report to check whether you qualify. If it falls within the 550-620 credit rate or score range, the sales reps will provide you with an application form.
Inside, you’ll read about the requirements for receiving a subprime car finance.
After providing all the requirements, and paying lenders application fees, your dealership will work out a payment plan based on how much you can afford to spend monthly.
Low monthly installments mean signing up for the longest repayment period available.
If you agree to your lender’s credit terms, the dealership will hand over the car keys to you.
Are Subprime Auto Loans safe?
Yes, they are.
In fact, you have nothing to worry about because the popular Consumer Financial Protection Bureau approves subprime car loans.
Popular Americans, car dealerships market services, and bank services who provide these services must explain to potential clients or consumers about the application process, terms, interest rates, other important data, and professional assistance.
Subprime is safe because you receive the car immediately after paying a specified down payment.
Receiving a subprime car loan doesn’t lower your credit score.
Is there a grace period for car dues?
Fortunately, most creditors don’t expect you to pay up at the beginning of the month.
Some creditors service a five day grace period, so you can miss payment and make them close after the deadline without penalties. If you’re lucky, you might meet a car dealership or related bank branch that will give clients or consumers a 10-day grace period.
If you anticipate a salary delay, you can avoid late payment fees by informing your car dealership in advance. This won’t affect your credit report.
How long can you defer auto loan dues?
It actually depends on your subprime loan provider.
When a car buyer explains his or her financial problems, the car dealership may provide lower payments temporarily.
If you usually pay $2,000 monthly but run into some temporary financial challenges, your car dealership will ask you to pay $1,000 for six months, so use this to your advantage when necessary.
There are a few creditors who allow car buyers to skip two consecutive payments on condition that the buyer will include the third payment.
However, this is risky because failing a third time leads to car repossession and ruined credit scores.
Can you give back the car to the finance company?
Voluntary surrender is where a financially-overwhelmed car buyer returns a motor vehicle to the car dealership or creditor that’s providing his or her car loan. Is this option legal?
Yes, it is. Voluntary surrenders are bad for you because some car dealerships won’t accept your car unless it’s fully serviced.
This can cause you sleepless nights because you somehow have to find enough money for car servicing despite facing unexpected financial hurdles.
What happens if I don’t pay my auto loan?
In this case, your subprime auto lender arranges for car repossession. If you’ve watched Operation Repo, then you understand that car repossession is not a rosy affair.
Actually, It’s noisy and humiliating because car repo men seem to enjoy towing away cars. Car repossession is humiliating and your credit score takes a nasty hit. If you think getting financial subprime loans is an uphill struggle, you have no idea how hard it is getting a bad credit loan when your credit score drops to 500 points or less.
What happens to my car if I lost my job?
The good news is that you can always seek financial help for a subprime auto refinancing plan. Some car dealerships that offer all these lending services under one roof.
An auto loan refinancing plan is better than voluntary car surrender because it doesn’t affect your previous car loan payment history.
How do subprime cars and auto loan refinancing work?
First, you need to fulfill a set of requirements such as
- having a minimum outstanding balance.
- Your car should be in excellent condition because the creditor will resell it in case you fail to pay your refinancing monthly installments on time.
If you meet these requirements, the new creditor will pay off your car loan balance. Since you still have outstanding dues, your new creditor will create a new monthly installment plan that matches your financial situation. The advantage of an auto loan refinancing plan is that you can lower your monthly installment by up to 30%.
What is a deep subprime auto loan?
A deep subprime auto loan is ideal for potential car buyers with credit scores of 500 or less.
Usually, such clients face numerous rejections from banks, car dealerships, and credit unions because a deep subprime credit score indicates low payment history and bitter creditors. While it’s possible for one to secure a deep subprime auto loan, one has to endure expensive interest rates. In addition, a car buyer with deep subprime credit cannot purchase a new car because a high price tag presents a great risk of nonpayment.