How subprime lenders help borrowers with bad credit
Subprime lenders play an important role in auto financing because they give borrowers with poor credit a chance to get a car loan when they need it most. Let’s see how they can help when traditional lenders can’t or won’t.
What is a subprime lender?
A subprime lender is a third party financier who generally works with certain special finance dealers to help people who would not otherwise qualify for auto loans. Traditional lenders – banks, credit unions, and captive divisions of some manufacturers – are not as able or willing to work with consumers who have low credit scores and / or credit problems.
Oak Park Financial’ online payday loans for bad credit look at your credit score and pull your credit reports, but they’re only part of your story, and these lenders know it. They also realize that in order to get the full picture of your situation, they need to look at many general factors, such as your ability, stability, and willingness to be successful on a car loan.
Are you solvent?
When looking at you as an auto loan, subprime lenders use many factors to get a clear picture of your credit and your situation. Whether you are in a poor credit situation due to circumstances beyond your control, or you get into the habit of not paying your bills, subprime lenders can make the difference. Indeed, there are two types of bad credit: situational and habitual.
A person with situational bad credit may have maintained their finances until something beyond their control – the coronavirus pandemic, for example – causes an unexpected job loss. With the loss of income, some things may have been put aside and the bills may not have been paid on time resulting in a drop in their credit score.
On the other hand, a person with habitual bad credit has a constant pattern of bad credit management. A person with habitual bad credit may not be bad, but each time a payment is missed, their credit rating may go down even further. Usual bad credit can be more difficult to overcome than situational bad credit.
Regardless of the type of bad credit you have, the subprime lenders will look at a few things to make sure that you meet the loan requirements. Each lender has their own requirements and stipulations, but, in general, they require:
- Proof of identity
- Proof of income
- Proof of address
- Proof of a working phone
On top of that, lenders typically ask for a list of five to eight personal references with full contact details and a down payment of at least $ 1,000 or 10% of the sale price of a vehicle.
Benefits of working with a subprime lender
When you’re struggling with credit issues, a subprime lender is one of the few ways to get the car you need and increase your credit. Every payment on time brings you closer to better credit. And because auto loans usually last a few years, you have time to grow your credit as long as you have control over all of your bills.
Subprime lenders are a great resource because they give you the opportunity to improve your situation by making possible the car loan you need despite your credit situation. However, you won’t find subprime lenders at every dealership, and it can be frustrating not knowing where to start. Fortunately, this is where we come in.
Here has Express auto loanWe work with a network of special finance brokers across the country who have signed up with lenders who can help people with many types of bad credit situations including bad credit, no credit, and even bankruptcy. Simply fill out our non-binding form auto loan application form, and we’ll immediately start matching you with a local dealer.