What Is Subprime Financing?

The financial center at Ray Price Chevrolet has been helping car buyers around Mount Pocono, Tobyhanna, Scranton, Stroudsburg, and East Stroudsburg for many years. One of the most common questions our advisors are asked is, “What is subprime financing?” Before speaking at length about subprime financing in person with you, we thought an overview would be a good way to get people introduced to this concept.

Subprime financing is a layered topic, but it essentially boils down to an auto loan that caters to individuals with below-par credit. To learn how it all works, keep reading!

Understanding The Premise Of A Subprime Auto Loan

The goal of our dealership is to help you land your favorite model. If you've selected the right vehicle but don't have the strongest financial track record, a subprime auto loan is likely your best option.

Subprime auto loans require higher interest rates than typical loans due to the credit history of the person receiving the loan. Still, a subprime auto loan is versatile and can be adjusted to better fit into your budget.

Typically, you'll have to pay off the entirety of a subprime auto loan in a predetermined amount of time as opposed to condensing the loan so that you can pay it off more quickly.

How Subprime Auto Loans Work

The rates and overall structure of your subprime auto loan will be determined by your credit score. The purpose of a credit score is to track the financial history of an individual and then approximate the reliability of that person when it comes to future loaning opportunities.

Credit scores can vary between 300 and 850. Subprime auto loans are typically reserved for those who fall below the 600 mark, yet each case is different.

While credit scores are important, other factors will be taken into account when you try to secure a favorable loan. The best thing to do is speak with an advisor in person to go over your options.

Improving Your Credit Score

At our finance center, one of the goals we often set out for people is to improve their credit score. The higher your score, the better rates you'll receive on your next auto loan.

To get that score trending in the right direction, it's important that you make debt payments in full each month. You don't want any payments to linger over time, even if they're small amounts of money.

It's best to consolidate all of your debt onto a single card, too. Lastly, avoid any risky financial endeavors such as accepting large cash advances that come with high interest rates.

Consider A Subprime Auto Loan

To learn about the different financial possibilities available to you, come by the Ray Price Chevrolet Finance Center. We have advisors who will happily answer any questions you might have.

If a subprime auto loan is the right fit, we'll organize it for you so that you can enjoy your next model around Mount Pocono, Tobyhanna, Scranton, Stroudsburg, and East Stroudsburg.

Contact us today!

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