The Subprime Saga: Getting An Auto Loan When Your Credit Score Is 500The Subprime Saga: Getting An Auto Loan When Your Credit Score Is 500

Nobody wishes a credit score which is less than perfect. A number of things pile up before you lose your stellar credit score. For some, it might be an unexpected illness, sudden job loss or even wrong financial advice. However, if you have set your eyes on a new car, getting the required financing is not a difficult task. Thus, if you have a subprime credit score of 500 or less, fret not, it cannot keep you from purchasing your dream car.

Auto Loan Tips for Buyers with Less-than-Perfect Credit Score

The following points will help you to evaluate your situation and take the correct steps in order to obtain a subprime auto loan quickly and easily.

1. Focus on getting Pre-Approved Auto Loans

The importance of a pre-approved auto loan is immense for every car buyer. When you go out to obtain auto financing for your car, keep in mind the role that a pre-approved auto loan will play. Remove the notion that pre-approval comes with high-interest rates. Do not close your deal before visiting 5-6 lenders. Chances are that you might find better interest rates if you dig more and shop around. Put all your efforts in securing a pre-approved auto loan and only then, focus on selecting a car that is right for you.

2. Save Money, Pay Down Payment & Negotiate Better

The ideal down payment amount equals to 20 percent of the total price of the car. Lender’s perception of bad credit car buyers can change drastically if they are willing to put down more than 20 percent of the total amount. Thus, it is a good idea to save three-four months of your income and use the money to pay a good amount of down payment. A large down payment puts you in a good position to negotiate lower interest rates than what is offered by subprime lenders. It also helps you in gaining a faster auto loan approval.

3. Building a Better Credit Score

A poor credit score does not reflect your character or ethics. However, it definitely creates an impression on the lenders. When you work towards building a better credit score, it transforms their perception and you gain more trust. You can build a better credit score by keeping your credit utilization rate on credit cards less than 30 percent. Paying bills on time, having several credit accounts and obtaining secured credit cards are different methods that you can use to build a strong credit score.

Bad Credit History can lead to a Good Future

Believe it or not, an auto loan can be the building blocks that will lead you to a stellar credit history. Obtaining an affordable subprime auto loan will increase your chances of building a higher credit score. Therefore, do not hesitate to obtain an auto loan for your next car as it is not only the bridge between you and your new car, but it can also transform your credit score from 500 to 700.


by Kaitlin Miller
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