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. To make sure that all of our approved applicants will be able to make payments on their vehicle loans, we cannot accept applicants that hold seasonal positions or have been at a temporary job for less than six months.
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, another might consider a low credit score for car loans, acceptable to meet the requirements of their loan. Sub prime 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. Valley Auto Loans uses 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
When analyzing applications for subprime loans at Valley Auto 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 closer at a person’s ability to pay back a sub prime auto loan with steady paychecks from a good solid work history. With subprime car loans, your auto loan credit score will improve over time. Many car dealers and auto loan lenders use your auto loan credit score history to judge your ability to pay back the loan. Your auto loan credit score is different from your standard FICA score in that it shows all your auto loan history. This can be good 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.
Situational Subprime Loan Credit
A bad credit score is shown when a person’s history is filled with maxed out credit card balances, missed payments to various accounts, frequent changes in jobs, and low-income. On the other hand, a situational poor credit history might show that someone has kept a high-paying job and has diligently made payments on credit accounts. They then had an unexpected financial emergency springs up and lost their good credit score. In this case, the person with a situational bad credit score would likely be perceived as less of a risk. Less risky than offering car loans to drivers with terrible credit, even though these two people technically have the same credit score. Those who do not have the credit to secure the loans necessary to buy a car by some lenders are excepted by bad credit lenders.
Typical traits of subprime credit history include multiple outstanding balances, bankruptcies, and delinquent on the existing accounts. Typical characteristics of a situational poor credit history include sudden loss of job, divorce, a medical emergency, illness, etcetera.
Improving Your Credit
Taking the right steps to reconstruct your credit score from 575 to 640 may seem like a daunting task, but it is probably the best way to get better rates on your auto loan. If an applicant’s credit score is below but close to 575, it is likely that they can even qualify for a loan, but they probably don’t qualify for the best or even the mid-tier rates. People with scores at or above 640, however, are usually able to be eligible for these mid-tier rates, allowing them to save thousands of dollars over the life of the loan.
Many have discovered, because of a bad credit score, they were not eligible for the financing they need for their dream car. Fortunately, there are things you can do to get your credit score up. If your score is hovering 575, odds are you’ve made a few small mistakes with your credit. You have not, however, made a major mistake such as filing for bankruptcy or going through a repossession within the past three years. Therefore, these strategies should help you get the increase you need and help turn things around so you can qualify for a better interest rate.
- Pay off charged off accounts. The most common reason for having a credit score in the high 500s is an account that didn’t get paid. Usually, this is an old medical bill or credit card that got sent to a collection agency when you forgot to pay the bill. A charge-off is sold to a bill collector who pays pennies for the amount you owe. The difference between what they paid and what you owe is their profit, but it also means that you can negotiate with a bill collector to get the bill reduced. By agreeing to pay off the balance, the bill collector makes a profit and is usually willing to take the wrong information off your credit report. Of course, make sure you get this agreement in writing before you pay off any old bills.
- Pay down your debt. If you are using a lot of your available credit, your score will go down. Get some of your debt paid off, or ask for the limits on your credit cards to be raised to improve the ratio between the debt you owe and the credit you’ve been extended.
- Wait. If you missed a payment, odds are you will not be able to get the mistake taken off your record, but it will affect your score less and less as time goes on. Wait a few months, don’t make any mistakes, and your score will go up.
To Start the Subprime Car Loan Process
The auto loan process starts as soon as you apply for one. After completing an application and submitting it, Valley Auto Loans will begin the search in a vast network of the best subprime auto lenders and financing groups. There is no application fee and no obligation. Did you have subprime credit when you bought your car? It may be time to refinance for a better rate.We offer auto refinance for bad credit, so as your credit improves over time you have the ability to refinance later for a lower interest rate.
One subprime car loan lender might be willing to lend money to an individual that has a car repossession in their history while another might consider it too high of a risk. This is why using services like Valley Auto Loans to search a diverse database with their fast and smooth process for lenders that meet your needs is the best route to go. Because the network spans over such a long distance and has so many subprime auto loan lenders, it is easy to find a match for any applicant, regardless of his/her credit situation. Some subprime loans come with a higher APR than you would like but remember that it is only to establish a good credit rating then you can refinance the sub prime auto loan for a better APR as soon as your qualify.