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What is Subprime Auto Finance?

If you are planning to buy a new car, but you have a limited credit history or less than perfect credit, consider getting a subprime auto loan. A subprime auto loan is a loan used to finance car purchase, and it is offered to people with poor credit scores. 

One of key factors that lenders use to evaluate the creditworthiness of borrowers is a credit score. Lenders use credit scores to determine if a borrower qualifies for a loan, and their ability to make loan repayments on time. Usually, a low credit score can make it difficult for you to access financing to buy a new or used car. If you have a low credit score, you can find car dealerships that accept bad credit in your area. 

What is a Subprime Credit Score?

A credit score is a three-digit number that shows the borrower’s level of credit risk. Some of the factors considered when calculating a credit score include loan payment history, any unpaid debts, credit mix, credit age, and credit utilization. Lenders get this information from the borrower’s credit report. 

There are various credit bureaus in the United States, and each of these bureaus uses a different scoring model to calculate a borrower’s credit score. When calculating a person’s credit score, credit bureaus collect information from multiple financial institutions such as credit card issues, banks, credit unions, etc. Generally, credit bureaus rank credit scores as follows: 

800-850: Exceptional

740-799: Very Good

670-739: Good

580-669: Fair

300-579: Very poor

The lower the score, the more difficult it is to secure an auto loan. A score below 669 is considered to be high risk, and borrowers whose credit score falls in this category are considered to be in the subprime category. 

How Subprime Auto Finance Works

Subprime auto finance solves a real need in the auto loans industry. A high proportion of potential buyers have a poor credit history, which makes it difficult for them to access credit from traditional lenders. For such buyers, a car is necessary for them to maintain a job or continue offering a service such as home repair and installations. Due to their perceived high risk, traditional lenders generally stay away from lending to this category of borrowers.

If you are unable to access credit from traditional lenders due to your poor credit or limited credit history, you can find alternative lenders such as bad credit auto dealers that focus on lending to subprime borrowers. Bad credit car dealerships provide auto loans without subjecting you to a stringent approval process that is common among traditional lenders. There are no credit checks, and borrowers enjoy longer loan repayments. 

How we can help

If you are looking for a car dealership that works with bad credit in Prescott,AZ, CarXpress is here to help. We provide full in-house loan origination and servicing, and we do not charge interest on 80% of our auto loans. Whether you missed a big payment before, or your credit history is limited, we have the right auto finance for you.

Our subprime auto loan approval is easy and seamless. Our buy here pay here program has a 0% APR interest, is which pretty straightforward compared to what you would get in financial institutions. Once you identify the vehicle that you want to buy, submit an online application and we will handle the rest. Our approval process is quick and easy, and will be get the best auto loan financing for you. Get in touch with us by calling or texting us at 602-688-2277.

 

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