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Subprime Auto Loans for a Poor Credit Score
What's On This Page:
- 1 Subprime Auto Loans for a Poor Credit Score
- 2 What is a Subprime Car Loan?
- 3 Subprime Auto Funding Options
- 3.1 You do not need to worry about a sub-prime car loan.
- 3.2 Online Car Loans Offer Quick Approval and Remove Stress
- 3.3 Subprime Auto Lenders Will Require a Steady Income
- 3.4 Degrees of Subprime Credit
- 3.5 Subprime Auto Refinancing To Get Money Back
- 3.6 Situational Subprime Loan Credit
- 3.7 Improving Your Credit, You Can Raise Your Score
- 3.8 To Start the Online Subprime Car Loan Process
- 4 Subprime Auto Financing Tips
We Offer Easy Applications and Fast Approval Online
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.
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.
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?
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. Our page is your ultimate guide to pre-qualify for a sub-prime auto loan and making the most informed choice possible in the process.
How do I know if I need a Subprime 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.
Typically, an auto credit score gives more weight to an individual’s payment history on vehicles.
Someone who has missed a few payments on a credit card but has managed to make full, on-time payments on their car loans will probably be able to qualify for a new subprime car loan.
Bad credit, subprime auto refinancing for their old loan is also possible. Subprime auto refinancing recaptures some of the equity their car has accumulated. If you have subprime credit and need a car loan, reputable subprime auto lenders base their loan on your job and income at that time.
Even though you may not be able to get a new credit card or a larger line of credit, you may have a sufficient credit score for a subprime car loan.
What is a Subprime Car Loan?
A Subprime car loan is a particular type of car loan designed for people with poor credit histories.
A credit score is often considered being “bad” or “low” when the FICO score falls under 640.
Those that have credit scores that lie under 640 are labeled by many lenders as being risky to deal with, and therefore, it is hard for them to find loans or lines of credit.
The best subprime auto lenders know that subprime auto loans can be used to rebuild credit when you cannot qualify for a loan because of a low credit score. People with a score below 550 have a good chance of getting a subprime online. Subprime auto lenders offer the best car loans with a lower APR than conventional banks.
Subprime car loans are set up for people with bad credit to help repair past credit mistakes.
Reputable Subprime Auto Lenders
Subprime auto loans get a bad rap because of their high interest rates. However, this is still a reliable form of funding for people today. Even though the subprime car loan gives you a higher APR than you would like, In many cases the subprime auto lenders APR is lower than you would get from a traditional lender because the subprime lender is competing for your business with other banks of this type.
The traditional lender will not do this because they do not want a high risk loan.
The high-interest rates protect a lender who specializes in subprime loans in case a person is unable to repay the loan. Accessing subprime funding is easy because many reputable subprime lenders offer them to people who have spotty credit histories. All a person has to do is prove they have a source of income so that bankers can be sure their loan is paid back.
Sub-prime lending is an excellent option for people who need car financing but have experienced some turbulent times in the last decade and can’t qualify for a conventional car loan.
Many people today are working on rebuilding their financial situations. A subprime auto loan gives people freedom, flexibility and the chance to find some great jobs and rebuild their credit score.
To make sure you are on the right page, consider obtaining a free copy of your credit report to get an idea of where you stand financially before you sign up for a car loan. Websites like AnnualCreditReport.com offer one free copy every twelve months for users. Before you apply for a loan with Valley Auto Loans, be sure to look over your credit report for accuracy and any discrepancies so that you are not assessed on incorrect information or old, nonexistent accounts.
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.
Online Car Loans Offer 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 sub prime 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 Canada or 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 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.
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.
We do have lenders who offer car loans for low income if you make at least $1,500 a month or more.
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. 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 closely at a person’s ability to pay back a subprime auto loan with steady paychecks from a 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 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.
Subprime Auto Refinancing To Get Money Back
Subprime auto financing is a way to reclaim equity you have built up in your vehicle while paying your car loan. Through auto refinancing, you can use that capital to pay for unexpected emergencies or unforeseen payments like getting a lawyer or paying for a divorce.
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 from some lenders are excepted by bad credit lenders.
Typical traits of subprime credit history include many 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 or illness.
Improving Your Credit, You Can Raise Your Score
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 have 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.
- Increase your credit limit – People that have credit cards and are carrying balances that are close to their credit limit have run out of available credit. This is reflected in their credit score. In this case, you can call your creditors and ask to have your credit limit extended. As your credit line is increased, you will have a larger credit limit, and your credit score will automatically increase. This is one of the easiest and fastest ways to improve your credit score.
- 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 have 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 Online Subprime Car Loan Process
The online auto loans 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 using online car loans. We offer online 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 auto 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 you qualify.
Subprime Auto Financing Tips
It is likely that you’ll eventually want to be able to cruise any dealership of your choosing and be able to settle on a price that will be fair. Without having to worry about being turned away because of your subprime credit score.
Subprime car loans from Valley Auto Loans can help make that a reality regardless if you are looking to buy or lease! Lenders will begin reporting your payments to credit bureaus, and because of that, it will not be long before you start seeing some positive change in your credit rating.
We do suggest that before you head to the car dealers, you should look through the valuable resources on our resource page. Please read through the “New Car” and “Used car buyers guide.” Take advantage of the payment calculators to help you get an idea of what you can afford. You will also find a variety of “How-To” information, like plugging a leaking tire, changing your wiper blades, or jump-start your dead battery, fixing a broken car window and more.
Collateral Helps the Process
Car shoppers should know that saving up even a small down payment can help lower rates and improve terms. Lenders want to see that people are invested in their financial future and responsible.
A small down payment, even just a small percentage of the total loan, shows a bank or lender that a person has taken the time to save and plan. This is a chance to shorten a repayment period, lower interest rates, or slash away at monthly payments.
Additionally, if there’s a vehicle that you have your eye on that is just out of your financial reach. Require that the dealer presents a factory dealer invoice copy to you and consider making a bigger down payment. A more significant down payment sends a bold message to the lender that you are more serious about the vehicle. They have more of your money in hand for security if you default on payments or sustain a repossession.
This strategy is most useful for those that suffer from situational credit history and want to make a point that they are financially responsible.
If you have run out of options for finding subprime auto lenders whom you trust with getting a car, apply with Valley Auto Loans.
You are not going to find any other organization that will face you up with countless subprime lending companies and helps you narrow down the perfect one to work with, according to your needs and credit situation. Before you head out to the glamor of auto sales lots, save yourself the time and hassle of getting involved with the wrong lender, and apply with Valley Auto Loans today for personalized subprime car loans and consultation.