Bad Credit Auto Loans
How do bad-credit car loans work?
On the surface, a bad credit car loan, also called a subprime car loan, works the same as a standard vehicle loan: the car buyer borrows money from the lender and pays it back with interest over a set number of months (usually 48 to 60, but other term lengths are possible). The main difference is that the interest rate will be higher to reflect the lender’s risk in working with people who haven’t shown a strong history of paying their bills on time or in full. Some of these lenders may also require automatic withdrawal of the installment payments, while others call for weekly payments instead of the typical monthly arrangement.
I know my credit score isn’t great, but how do I know if it’s in the “bad” category?
There are a few different credit score scales, but let’s look at FICO (Fair Isaac Corporation) since it’s the most universally used system. FICO uses a range of 300 to 850, and the categories are split as follows:
300 – 579: Poor
580 – 669: Fair
670 – 739: Good
740 – 799: Very Good
800 – 850: Exceptional
Lenders may use the above breakdown to decide which borrowers they’ll work with (for example, they may automatically reject applicants who fall below 670, eliminating anyone in the Fair and Poor categories), or they may set their own arbitrary cutoff score.
I’m working hard to raise my score, but it’s still low and I need a car now. What can I do?
Don’t give up! There are quite a few lenders out there who understand that people go through tough times, and that’s why they offer subprime loans. Now that you’re aware of where your credit stands, your next step is to apply with the help of an experienced auto financing professional. Our financing team at Balise Honda of Springfield will guide you through the process, answering all your questions along the way. We’ve established great business relationships with excellent lenders, and chances are good that at least one of them is willing to help get you into that new vehicle.
One important thing to keep in mind is that your low credit score is temporary – as long as you are responsible with your credit going forward. If you consistently pay all of your bills on time and don’t open any unnecessary accounts, your credit score will rise as your debt ratio falls and you prove that you’re committed to financial responsibility. Soon enough, you can even apply to refinance your loan into better terms, namely a lower interest rate.
Common Credit Issues
Having bad credit can make your life more difficult, sure, but it’s not something that should leave you drained of all hope. If it’s any consolation, there are tons of people in the western MA area who are victims of poor credit, and we’ve helped many of them get back on their feet with the help of a manageable auto loan. How can an auto loan help you? You might be thinking that one can only serve to make matters worse, but here’s the truth: if you make payments towards your loan on time and in full, you’ll be able to boost your credit score immensely.
It’s easier than you might think, and by scheduling an appointment with our financial advisors, they’ll be able to go over the specific details of how it all works with you. With that said, we encourage you not to wait to get your life back on track. Let’s improve that credit score of yours together starting today!
What Brings on Bad Credit?
There are a number of reasons why people come to experience bad credit, but there are some that we see the most among our customers here at Balise Honda. Essentially, bad credit is caused by missing payments on your bills, since this indicates financial irresponsibility. The more often this happens, the lower your credit score will become. To learn more about some of the biggest causes of bad credit, check out the list below.
Going through a divorce is a life-changing event that is only made worse when you discover the drop in credit that sometimes follows. Give our finance team at Balise Honda the chance to help you gain more financial security with a manageable auto loan.
Forgetting to Make Payments
Having bad credit boils down to missing loan payments. While a few missed payments won’t tank your credit, several certainly will. If you’re having a difficult time managing your monthly payments, let our finance advisors help you discover some solutions to keep you on the right track.
If you’ve recently lost your home to foreclosure, then chances are you’ve experienced a drop in your credit score. To get it back up to an appropriate level, see if a finance expert at Balise Honda can’t help you out.
Not Having Any Credit
If you don’t have any credit but still need a car, Balise Honda can help you acquire both. With an auto loan, you’ll not only have a form of transportation, you’ll also have stellar credit if you make payments on said loan.
Even though filing for bankruptcy will relieve you of all debts, it will absolutely destroy your credit. To build it back up, let’s see if we can help you out with a low-interest auto loan.