8 Lowell Rd Salem, NH 03079 603-898-2886

What is Subprime Auto Finance

If you are planning to buy a new car, but you have a limited credit history or less than perfect credit, consider getting a subprime auto loan. A subprime auto loan is a loan used to finance car purchase, and it is offered to people with poor credit scores.

One of key factors that lenders use to evaluate the creditworthiness of borrowers is a credit score. Lenders use credit scores to determine if a borrower qualifies for a loan, and their ability to make loan repayments on time. Usually, a low credit score can make it difficult for you to access financing to buy a new or used car. If you have a low credit score, you can find car dealerships that accept bad credit in your area.

What is a Subprime Credit Score?

A credit score is a three-digit number that shows the borrower’s level of credit risk. Some of the factors considered when calculating a credit score include loan payment history, any unpaid debts, credit mix, credit age, and credit utilization. Lenders get this information from the borrower’s credit report.

There are various credit bureaus in the United States, and each of these bureaus uses a different scoring model to calculate a borrower’s credit score. When calculating a person’s credit score, credit bureaus collect information from multiple financial institutions such as credit card issues, banks, credit unions, etc. Generally, credit bureaus rank credit scores as follows:

  • 800-850: Exceptional

  • 740-799: Very Good

  • 670-739: Good

  • 580-669: Fair

  • 300-579: Very poor

The lower the score, the more difficult it is to secure an auto loan. A score below 669 is considered to be high risk, and borrowers whose credit score falls in this category are considered to be in the subprime category.

How Subprime Auto Finance Works

Subprime auto finance solves a real need in the auto loans industry. A high proportion of potential buyers have a poor credit history, which makes it difficult for them to access credit from traditional lenders. For such buyers, a car is necessary for them to maintain a job or continue offering a service such as home repair and installations. Due to their perceived high risk, traditional lenders generally stay away from lending to this category of borrowers.

If you are unable to access credit from traditional lenders due to your poor credit or limited credit history, you can find alternative lenders such as bad credit auto dealers that focus on lending to subprime borrowers. Bad credit car dealerships provide auto loans without subjecting you to a stringent approval process that is common among traditional lenders. There are no credit checks, and borrowers enjoy longer loan repayments.

How we can help

If you are looking for a car dealership that works with bad credit in we are here to help. Whether you missed a big payment before, or your credit history is limited, we have the right auto finance for you.

Our subprime auto loan approval is easy and seamless. Once you identify the vehicle that you want to buy, submit an online application and we will handle the rest. Our approval process is quick and easy, and will be get the best auto loan financing for you.

How to Buy a Used Car in 10 Steps

How to Buy a Used Car in 10 Steps

1. Figure Out How Much You Can Afford

Before even seriously browsing cars online — and absolutely before setting foot in a dealership — it is vital to figure out how much you can afford to spend on a used car. If you plan to simply buy the car outright, factor out how much money you have to comfortably dole out. Most buyers will take out a loan. If doing so, calculate how much money you can spend on the monthly payments.

In addition to the initial or recurring costs, remember to budget for other expenses related to the car. These include insurance, registration and fuel. It’s also wise to set money aside for maintenance, both the routine stuff like tune-ups, and potentially pricier things like repairs. By nature, used cars are more likely to need services sooner than a new car. And unlike a new car or leased car that comes with complimentary maintenance, the responsibility of servicing a used car will be on you.

So set a budget, whether it’s $10,000, $20,000 or $30,000 on a used car, and stick to it. In addition to giving you a target price and parameters to work with, a target price will help if you take out a loan. Factor the monthly payment into your overall budget, including mortgage or rent, child care, utility bills, food and household expenses, and other loans such as student debt.

Also be sure to factor in the costs of tax, title, registration and insurance for the used car you’re buying. As a broad rule and depending on where you live, tax, license, assorted fees and other costs will add roughly 10 percent to the purchase price. This makes the price of a $30,000 car actually about $33,000 and, if you’re financing the deal, you will be paying interest on that additional amount. Also factor in insurance costs. You can do this by getting a quote on the vehicle or vehicles you’re considering from your insurance provider.

2. Find the Right Vehicle for You

Once you’ve established how much you can spend on a used car, it’s time to find the right one for you, or at least a list of several candidates. There are hundreds of different vehicles out there, and the pool of contenders only grows when you consider models over a range of years. This may seem daunting, but the good news is that with such a variety, there is a vehicle that’s right for you, whether it’s a small SUV, large pickup truck, midsize sedan or a sporty convertible (and if it’s the latter, lucky you).

If you’re reading this, you already know that most of the browsing and research of your next vehicle can be done online. KBB.com has extensive and deep information on every major make and model of vehicle. From expert and unbiased reviews from our editors to finding the horsepower and length of the car (will it fit in your garage?), all the information you need is at your fingertips. It’s also helpful to read consumer reviews of the vehicle you are interested in. Those can also be found here at Kelley Blue Book.

As with any vehicle purchase, consider not just your present needs but your future ones, too. If you’re planning to grow your family, now is probably not the time for that 2-seat sports car. And if you’re planning on a third child, we’d recommend a 3-row SUV or minivan over a smaller 2-row SUV.

Advertisement

A great place to start is the Car Finder section of KBB.com. This lists cars by category such as truck, crossover, sedan and more, plus feature content. For example, if your next car must have remote start and heated seats, it will filter vehicles with those features.

Be sure to read the vehicles’ Expert Review. A vehicle’s features and design can change drastically from one year to the next. Read our reviews of the model over several years to make sure you’re getting the style and features you want.

3. Find Used Vehicle Prices

Now that you have a list of potential vehicles or one specific car in mind, check its price. Kelley Blue Book is known for its pricing expertise, and you can find accurate data in our Car Prices section.

In addition to finding the price of a specific make and model – such as a Ford F-150 – be sure to check the boxes for features you want, such as 4-wheel drive or a crew cab. Our pricing reflects not only how much money it will take to buy a used car from a dealer, but also from a private party or individual seller.

We encourage considering a certified pre-owned (CPO) vehicle. CPO cars have been put through rigorous examination by a dealership and must meet certain parameters such as mileage, age and condition. Certified cars are backed by warranties that can be even better than those of a new car. They have also been serviced and detailed inside and out. The idea is that a CPO car looks and performs as good as or nearly as good a brand new one.

CPO vehicles generally cost more than a similar used car that isn’t certified, but with a CPO vehicle you get the best of both worlds: a used car that will cost far less than a new one due to depreciation, but one that has been meticulously checked for problems and is backed by a warranty, just like a new vehicle.

If buying the car from an individual, unless the car still has some of its factory warranty left on it or you buy an after-market warranty, you are more than likely buying the car “as-is.”

4. Check Your Vehicle’s Price

If you plan to sell a car you currently own and use the money toward your next vehicle, you’ll need to see how much your car is worth. We’ve literally written the book on this. Head over to the My Car’s Value section of KBB.com.

There you can input the make, model and condition of your vehicle, along with its features. Be realistic about its condition. That dent on the door may be character to you, but the next buyer won’t feel the same. From there you’ll get the Kelley Blue Book trade-in and private-party values.

If you just want to be done with the vehicle and get it off your hands quickly and easily, you might consider an Instant Cash Offer. This process is exactly what it sounds like, and is an official offer from a dealer to buy your car based on the Kelley Blue Book value. It saves the hassle of negotiating a trade-in at a dealership or having low-ball text offers from strangers if trying to sell on your own.

5. Get Financing Lined Up

Now that you have some vehicles in mind and your budget set, research your finance options. Most dealers offer financing, but we always recommend having an alternative as well. That can be a loan from your bank or credit union.

If the dealer can offer you a better deal, great. But getting pre-approved for a loan and your financing ready before setting foot in a dealership gives you more flexibility and won’t make you beholden to just one sales lot or dealership. It also shows the seller that you are a serious buyer, not just window shopping.

6. Contact Sellers

When you’ve browsed used cars for sale and found one that you like and fits your needs and budget, you can take the step of inquiring about it. If the car is being sold by a dealer, it’s wise to call and see if it’s still available.

The same goes for a private party seller. In both cases, this is the point where you can ask questions about this specific used vehicle. If it’s being sold by an individual, ask why they are selling it and if there are any issues with the vehicle.

Other factors must also be determined if the car is being sold private party by an individual. You’ll want to know if they have the title and that it’s clean (as opposed to a salvage title), if they have maintenance records, and if they still owe money on the vehicle or if there is a lien on it.

These potential headaches can usually be avoided if you buy the vehicle from a dealer. The car might cost a bit more money than buying from a private party, but it can save a lot of frustration.

7. Get a Vehicle History Report

If you have one specific vehicle in mind that’s for sale from a dealership or private seller, it’s a good idea to check its history. A vehicle history report is derived from the car’s vehicle identification number (VIN) and will let you know if it has been involved in an accident, has a clean title, or other issues.

Vehicle history reports are available from Carfax and AutoCheck, and some listings will include it free. If you’re seriously considering a vehicle for sale from a private seller, getting a history report is an especially good idea to head off potential problems or sticking points.

8. Examine and Test Drive the Car

Now that you’ve put in the work of budgeting, researching and finding a potential used car to buy, it’s time to take it for a test drive.

This can certainly be an exciting experience, but try to be objective and not let emotions get the best of you. Poker face, remember?

Whether the car is being sold by a dealer or individual, you’ll want to focus on important aspects of the vehicle. Before getting behind the steering wheel, give it a proper inspection. Balding tires, torn seats and faded paint are all signs of neglect, improper care or deeper issues. Sometimes the car will give a literal warning sign, such as a check engine light.

If you are really serious, bring along a mechanic or trusted friend who knows cars. Ask the seller about doing this before you see the car in person. A legitimate seller who gives a care will respect this wish and maybe even encourage it. Be wary if they say no. They may have something to hide and in that case you’ll probably do yourself a favor by walking away from the deal before stepping out your door.

Also, before getting the car on the road to test its acceleration, handling and steering, you’ll want to consider how you feel in it. Are you comfortable in the seat and does it adjust for a proper driving position? This is important. You will likely be spending years in this car and driving it thousands of miles. It’s imperative to make sure you are comfortable in it.

Check for visibility. Does it have nasty blind spots? And if so, does it have a blind-spot monitoring system to at least help prevent a problem? Also consider passengers. If you will be using a child seat in the vehicle, bring it along to test the fit and get a feel for how easy it is to get in and out.

If you have a teenager who is growing faster than a beanstalk, bring the kid along to see how they fit, too.

Once on the road, try not to get distracted by fancy features or a chatty salesperson. Again, make sure the car feels good to you. Be aware of brakes that don’t seem right, a vibrating steering wheel or if the car is pulling to one side. These can be indicative of larger problems. Once again, if you consider a CPO vehicle, you’ll have the assurance that the used car is in fine working order.

On the flip side, if you’re buying a used car from a kid down the street, you’ll want to be especially sensitive to how it’s been treated and how it feels. Don’t let somebody else’s problem become yours.

Finally, when safely parked give it a tech test drive. Does your phone pair easily? Does it have enough USB ports for your needs? If audio is important to you, play your favorite tunes, whether streamed via Bluetooth, on a USB stick or compact disc.

In today’s world, you might have the opportunity for the test drive to come to you. Ask the dealership about bringing the car to your house. This will also allow you to see how the car fits in your driveway and to test it on local roads.

If considering a car from a private seller, use common sense. We can’t stress this enough when buying a car from a stranger. Ask the seller to meet at a safe, third-party location. This can be at a busy shopping center or even the DMV parking lot. Do it in the daytime, not at night. We also recommend bringing a friend. This is another reason why it’s good to talk to the seller over the phone first and get a feel for them as a person. Trust your gut.

9. Negotiate a Price

Once you decide you want to buy a used car, it’s time to make a deal. Since you’ve already done your homework on KBB and have a Blue Book price for the car, you have an advantage and a great starting point.

If you are the type of person who likes to haggle, by all means do so. But also be respectful. Nobody wants a lowball offer. If you hate dealing, you might be more comfortable buying from a dealer whose prices are pretty much set.

As part of the negotiation process a dealer will often ask how much you are willing to pay. There is less chance for confusion if you aim for an overall price rather than a monthly payment. Many buyers are what’s known in the business as “payment shoppers,” and they are looking for low monthly payments. We advise against this. The dealership may be able to meet your monthly payment demands, but it will quite often be at the expense of extending those payments for a longer duration. The best advice is to stay within a reasonable price range and don’t over-extend yourself.

This is also where it helps to have financing lined up with your own lender before walking in the door. Getting pre-approved for a loan from your bank or credit union gives you the power to take it or leave it when it comes to the dealer’s finance offerings.

One more thing to keep in mind: If you are trading in your old car to the dealer, treat it as a separate transaction. Determine the deal on the car you are buying. When a dealer tries to incorporate their offer on your old car into the new one you are buying, it adds another level of complexity. It takes your eyes off hitting the goal of the first and most important step: Getting the budget right for the car you are buying. So treat the sale of your existing car as a separate transaction.

10. Do the Paperwork

No doubt you’re eager to get behind the wheel of this new-to-you used car and find your favorite road or show it off, but before the fun begins make sure the paperwork is done. We know this sounds mundane, but it’s necessary.

By paperwork we mean not just the literal paperwork of signing the sales contract and finance/loan documents or paying for the car outright, possibly with a cashier’s check from your bank, but getting other necessary documents in order.

If you’re buying the car from an individual as a private party transaction, you’ll need a bill of sale. Such a form can often be found at your state’s Department of Motor Vehicles, including one you can download and print. You can also use this bill of sale form from DMV.org, a company that helps you navigate the sometimes complex DMV process.

You’ll also want to make sure you get possession of the vehicle’s car title and registration (and that they are correct). Registration papers can vary by state, so make sure you check what is needed in yours, especially if this is a private party transaction.

Last but certainly not least, make sure you add the vehicle to your insurance policy.

With paperwork done and keys in hand, you can now enjoy your new ride.

https://www.kbb.com/car-advice/10-steps-to-buying-a-used-car/

Text Us