When it comes to a subprime vehicle loan, it is meant for a borrower having a poor credit score and a blemish credit report. As per records of 2010, such kind of financing accounts for 20 percent of vehicle loan which was just 17 percent in the year 2009. Car shoppers, whose credit score is 670 or below can opt for a subprime car loan. In this article, we are going you talk about the ways you can lessen the cost of such a loan. Let’s read on to learn more.
Your credit score plays a very crucial role in deciding the loan type and the rate. Be it a good rating or poor, it’s the snapshot of your financial situation. It is that vital information that you must have before you go for car shopping because customers with a healthy score can benefit in terms of a good loan rate, as well. You can get to know about your credit rating from several online sites free of cost. There are other websites, as well, that charge a nominal fee of $10 or even less. You can look for credit bureaus such as Transunion, Experian and Equifax. These are good places to look for.
When you are applying for subprime auto loans, it is your responsibility to challenge any untrue report provided by any of the credit bureaus. If you find there are mistakes in the record, you have all the right to contest such inaccurate information. This is especially true for those who need to lessen the negative information on their payment history.
Once a customer is aware of his score, he can start looking for ways to improve it. Clearing old dues and paying utility bills on time are some of the things you can consider.
There can be several negative elements in your report. These include:
- Problems in clearing off old debts
- Possession of home or car due to failed payments
- Bankruptcy
- Accounts in collection
If any of the above are found in your report, ascertain which of them can be fixed in a short period of time. For example, if there are some small balances reported by any collection agency, try paying them off to improve your credit rating. Again, if an insignificant amount is due as far as your credit card statement is concerned; make such payments without any delay. These little things matter and will help you in improving your score. It will convince the car loan company that you are serious when it comes to making timely payments. To get better rates, all you need to do is to improve your credit profile.
The last but not the least is making a substantial down payment. Though most of the online lenders have zero down payment options, as well, but making at least 20 percent payment in cash will help in speedy approval of your application. When you pay 20 percent or more in cash, it helps you get a fair rate instead of a subprime rate.
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