Nowadays, there are several ways to finance a vehicle purchase, which doesn’t make navigating the process easy — especially for people who might not have a perfect credit score. When it comes to subprime financing, there can be a lot of misconceptions and confusion.

What is subprime financing?

Subprime vehicle financing is a different type of auto loan offered to an individual who doesn’t qualify for a typical prime rate loan because of different events that have impacted their credit rating. This includes a credit rating of 450-649, with “deep subprime” for those with a rating of less than 449. We get it, life happens and sometimes it can temporarily compromise your credit score. Instead of thinking of subprime auto loans as a hindrance, try to see how it can be an opportunity—securing an auto loan is a chance to purchase a vehicle at the time you need one and can help you rebuild your credit to be eligible for prime loans in the future.

Preparing to Buy a Vehicle with Subprime Financing

The vehicle purchase process with subprime financing differs from other types of financing by taking more time and requiring more financial information from you for a smooth process. We recommend you to complete plenty of research and preparation before you walk into the dealership.

Having these pieces of information prepared will set you up for your purchase appointment:

  • Pay cheques showing your monthly gross income
  • Proof of a working landline or cellphone in your name
  • A bank statement or utility bill to prove stable residency
  • A valid driver’s license (not expired, suspended or revoked) listing your current address
  • References with contact information
  • A downpayment, if possible

Specifics related to this information depend on factors related to the vehicle you are interested in purchasing, if you’re trading in a vehicle to us and how you will qualify once the process has started.

4 Steps of Buying with Subprime Financing

As with any financing situation, it's important that you know how the process of getting a subprime auto loan works and the order of operation to get your new-to-you vehicle.

  • You’ll first meet with our finance manager, who will act as an intermediary between you and the lender, submitting the information you provided.
  • The finance manager will verify the accuracy of your information and send the documents to the subprime lender(s) to determine if you will qualify.
  • Upon approval where you qualify for the subprime loan, the lender will inform the dealer of the maximum monthly payment amount.
  • We’ll work with you to find your preferred vehicle within your available price range.

Other Subprime Financing Tips

You can use subprime financing to your advantage, especially to walk away with the best possible deal for your budget.

  • Have your budget set in place before you walk into the dealership and stick to it. With this expectation in place, it will reduce potential undue stress on you.
  • Make sure you know what you are signing up for. Read the contract carefully and have a solid understanding of your interest rate (it typically ranges between 12 and 17% for subprime financing), payment terms, loan terms, and have a plan in place to make your payments.
  • Keep a copy of your contract and regularly review it.
  • Talk to the lender, they may be able to lower payment amounts, reduce or extend contract terms, depending on your needs. After some time that you’ve been making payments, try refinancing with a new lender. You may be able to qualify for a new loan at a lower interest rate.

How Surgenor Auto Credit Can Help

We believe that everyone should have access to different financing options for buying a vehicle and not be shut out of the market. Whether you want to get started, have questions, or are unsure about your alternatives on your journey to a new car, please contact us and we'll be pleased to help.

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