Understanding Subprime Car Loans

Have you struggled with financing in the past, but need to find a way to get back behind the wheel? Subprime car loans may be your road to owning a new car. However, there are some drawbacks to these loans that are important to understand. The team at PA Auto Credit helps you understand if this kind of loan is right for you.

What Is a Subprime Loan?

At its core, a subprime loan is simply a loan that is offered at less than a prime rate, usually for drivers with low credit scores. There’s no hard and fast rule that defines the range of a “low credit score,” but generally, if you’re below 619, you’ll need to find a subprime loan. In addition to having higher rates, these loans may come with additional restrictions.

What Do I Need to Get a Subprime Loan?

You’ll need to prove your income before you can apply for a car loan, and the same is true for subprime loans. If you work in a traditional office with a regular paycheck, you can bring in your W-2 form, 1099 form, or paycheck stubs as evidence. If, on the other hand, you need to include your cash tips to prove you have enough income, you can bring in recent bank statements.

Will I Need to Put Money Down?

With a subprime car loan, it’s especially important to make a significant down payment. Even if it’s not required by your loan, a large down payment helps you get ahead of depreciation – the process that immediately starts eating away at your car’s value when you drive off the lot. We recommend putting down at least 20 percent on your loan, and with a subprime loan, putting down more is even better.

Can I Upgrade Over Time?

At PA Auto Credit, we love to reward drivers who can keep up with their loans. If you are in good standing on your loan after a year, you can qualify for our car loan upgrade program. With this program, you can access better rates, so talk to our team to learn more.

Learn More About Subprime Car Loans in Fairless Hills, PA

Have you had trouble finding financing because of a poor credit history? Our team at our Fairless Hills, PA, auto credit center is committed to finding a plan that works for you. Stop by to find out more, then visit any of our affiliated dealerships and test out your next great drive!