I can tell you that I’ve been in your shoes…needing a car loan and a having horrible credit. I was terrified to walk into a bank or talk to a dealership because I was afraid that I would just get told no and leave feeling embarrassed. In this article, we are going to explain to you how to get a subprime auto loan approval without ever leaving the comfort of your home.
After some credit mistakes or unforeseen emergencies, consumers need help to rebuild their credit rating. A subprime auto loan gives people the chance to start fresh with a new loan and an opportunity to rebuild their subprime credit.
After a year of on-time payments, a person will see their credit rating improve. In just a short period, consumers will find some stability for themselves. Car Loans Of America can help you find some stability.
Subprime Auto Lenders and Online Subprime Car Loans
Subprime car loans give you a chance to start over, but this time with a reliable source of funding for a new car loan.
Anyone who has worried they will never find a car loan because of their bad credit can rest easy thanks to subprime auto loan options.
Fortunately, banks offering subprime auto loans and online subprime auto lenders have responded to this need by providing car loans for people with bad credit.
Banks offering subprime auto loans and auto refinancing with bad credit are great news for many. Refinancing your vehicle loan to get the money you need out of the equity has all the benefits of a personal loan without the high-interest rate.
Many subprime lenders have lowered their subprime auto loan rates making current subprime auto loan rates lower and easier to get than ever before. People with subprime credit, in the market to purchase a new car may not believe they can even qualify for subprime car loans but are finding great car loans are available.
Because of past credit penalties and a low score they were probably turned down for a conventional car loan.
What Credit Score Is Needed to Buy a Car?
When people think of their credit score, they typically think of the number assigned to them by one of the three main credit bureaus. By their ratings, individuals with scores higher than 720 qualify for the best rates on loans, while people with scores lower than 500 typically can’t get a loan at all.
If your credit score is at 550 or below, you are considered to have subprime credit and are categorized as a high risk of paying back a car loan. Many people find out their credit score when they apply for a credit card or try to purchase a car. Often, they are told that they do not qualify for a loan but never told the reason and how to fix it.
Your credit scores that the auto lender see can be different from the one you see online. This can put you in a bad situation when trying to get the lowest interest rate. Some people find out they have bad credit right after an accident and the insurance company totals their car. They need a new auto loan to replace the vehicle quickly, but their credit score is lower than they thought it was.
Subprime auto loans are designed to help people with bad credit build back a poor credit score.
Many subprime auto lenders have realized that these scores do not give the right information.
For many years, most car dealerships used this same set of numbers to decide whether their customers could qualify for an auto loan. Recently, many subprime auto lenders have realized that these scores do not give the right information to determine whether or not a person is an acceptable risk for an auto loan. There are several reasons for this.
Subprime Auto Lenders look at Credit Reports Differently
A “standard” credit report treats all loans equally. A missed payment on a credit card is processed the same way as a missed payment on a mortgage.
In life, many reputable subprime auto lenders recognize that people who have gone through hard financial times prioritize their debts. Missing a credit card payment is not as crucial as missing a payment on a bad credit auto loan or a mortgage payment.
Check your credit report for accuracy. Correcting any problems on your credit report before applying for a loan is strongly advised.
Secondly, a “standard” credit report factors in the length of your credit history. This is the amount of time that you have used credit and setting up revolving payment accounts.
Many young people who do not have a credit card or any other loans are often told that they do not have a long enough credit history to qualify for an auto loan. We find this to be true with college students and first-time car buyers. People in this category might be perfectly capable of paying back the loan, but the lack of information about their ability to do so means they cannot get a loan.
Obviously, using these credit scores were disqualifying many people from getting an auto loan when they would most likely be able to pay back the loan. For this reason, the auto lending industry started computing their own credit scores. This means that many people can secure a car loan with poor credit.
Subprime Auto Loan Benefits
With a reliable vehicle, borrowers who are using sub-prime loans can find better-paying jobs and put an end to needing to rely on public transportation or loved ones.
A person in need of a subprime auto loan may pay more, but there are some tremendous benefits. After all, they do not have to worry about their car breaking down all of the time or about the car giving out after a year or two.
You get what they pay for. The best subprime auto lenders know that car loans give people the chance to invest in a reliable vehicle, which improves job options and credit.
No Limitations with a Subprime Car Loan
When consumers decide on a subprime car loan, they do not have to limit their car choices. Instead of only having a thousand dollars to spend, a person may have three or four times this much. This means that a consumer can invest in a reliable car that will not break down. Not having limitations makes the car shopping process far easier to manage.
Quickly Compare Rates Online
Another bonus to subprime auto loans is that people can compare the rates online or in person. This makes it easier for people to look at different rates and terms. Thus, a consumer can be educated about finding the very best car loan for him or her.
There is a variety of lenders today that offer subprime auto loans and Valley Auto Loans offers services to evaluate your current situation and find a subprime lender that is right for your new car loan.
Subprime Auto Funding Options
You do not need to worry about a sub-prime car loan.
It is always harder to get financing with poor credit but because of economic advancements and a growing number of lower credit scores, Subprime auto loans are becoming very common and a lot easier to get.
Lenders know that consumers need a leg up in the world, especially now that the economy has come around and is thriving again. Banks can offer lower interest rates to subprime credit buyers thus; it is possible to find some great rates even on subprime options.
- Research not only the loans’ rates but also the lender’s reputations.
- Check websites and forums dedicated to this very task.
- Use the Better Business Bureau as another resource to research different auto lenders.
How to Get Quick Approval and Remove Stress
Most subprime auto loan lenders today allow consumers to go online, apply for a loan and hear back within moments. No one wants to wait weeks to hear back on whether he or she can finance a car.
Quick approval helps consumers see what their options look like. After seeing this, a person can then call the lender up and see if there any further options for better rates.
With subprime car loans, the credit check loans, while irritating and embarrassing to customers, is an important part of the auto loan qualifying process. If you have been turned down because of poor credit or low income but have a credit score of 500 or better, you may still qualify for a subprime auto loan.
Consumers need to organize their finances before they apply for a subprime auto loan.
This means not only knowing one’s monthly income, but one can afford to spend on this vehicle. Lenders will want proof of earnings, and it helps to have a car make and model in mind. In fact, if a consumer walks in knowing which car he or she wants to buy, this can speed up the process.
While requirements differ from lender to lender, there are general rules that Valley Auto Loans has in place for applicants.
Lenders who specialize in loans to those with sub-par credit require:
- At least 18 years of age
- Currently lives in US, and is a legal citizen
- Guaranteed employment (full-time or fixed) with at least a gross income of $1,500/month ($1,800/month suggested) Documented evidence of income. Income must be documented on professionally prepared and filed tax returns for the past two years.
Subprime Auto Lenders Will Also Require a Steady Income
Gross income – is the amount that you make per paycheck before it is taxed. To stay on the safe side, we require that all applicants verify and confirm their income by showing a record of past tax documents.
Of course, benefits such as child support, social security, alimony, or disability insurance should be included as well.
Your options for a subprime car loan may be limited by your employment status.
Degrees of Subprime Credit
It has to be understood that while one lender might see your credit score of 580 as being unacceptable for receiving a car loan, subprime lenders consider a low credit score for car loans, acceptable to meet the requirements of their loan.
Subprime lenders are not all the same when it comes to requirements and delinquencies with past credit experience. Look at the table below to decide where you fall concerning credit. Auto Loans companies use this information to determine many factors that play into your subprime car loan.
Decent | 625 – 600
Average | 600 – 575
Below Average | 575 – 550
Semi-Poor | 550 – 525
Poor | 525 – 500
Bad | 500 – 450
Awful | 450 – 425
Terrible | 425 – 400
Analyzing Applications For Subprime Loans
When analyzing applications for subprime loans, not every credit score is viewed in the same light. For example, a 575 credit score is not always looked at as unsatisfactory. In actuality, the credit history is checked along with the score to find out exactly what happened to generate that number.
His/her questionable credit history will be examined to decide whether it is habitual or situational. Subprime lenders look at more than just a credit score for auto loan approval. Subprime borrowers require special financing to repair their subprime credit score.
This can only be done through reputable subprime auto lenders who look closely at a person’s ability to pay back a subprime auto loan with steady paychecks from a solid work history. Many car dealers and auto loan lenders use your auto loan credit score history to judge your ability to pay back the loan.
Your car loan credit score is different from your standard FICA score in that it shows all your auto loan history. This can be useful if you have bad credit or no credit but have always made your car payments on time. For someone in this category, subprime auto lending is the best way to get a car loan with bad credit.
If you would like to use a subprime car loan to bring your credit score up again, you should certainly try to understand how they work and how easy it is to apply online for a subprime loan.
As you would expect, it is easy to apply for a subprime auto loan for a poor credit score or if you have less than excellent credit. Just fill the application out and wait, right?
We at Car Loans Of America can also help!
Unfortunately, there is much more to make the best loan choice for saving the most amount of money possible on your next car loan.
Knowing your options and taking the right steps to reconstruct your credit score is important.