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What are Subprime Car Loans in Hannon?

What are Subprime Car Loans in Hannon?

Have bad credit? Trying to improve your score and need a car to get to work or school? You’re not alone. Thousands of Canadians have a less than perfect credit score and still need to get around. That’s where subprime auto loans come in.


What are subprime auto loans? How do they work? How can you get one? All these questions will be answered below by our Hannon auto loans team.


What are subprime auto loans?


A subprime auto loan is a specific type of loan designed to help those with poor credit access finance.


Subprime auto loans are also known as bad credit car loans. They work a lot like standard car loans, where you borrow against the car you buy, use a down payment to reduce the amount and pay off monthly.


The main difference is subprime loans are more expensive.


Because they are mainly used by those with bad credit, subprime loans are regarded as more risky than standard loans. As loan interest is applied depending on risk, the higher the perceived risk, the higher the interest rate.


How do subprime auto loans work?


Subprime auto loans work in the same way a standard loan works. You put together a down payment and/or trade in, check your credit score, set a budget, get prequalified and then apply for the loan once you’re ready.


The lender scrutinizes subprime loans much more closely than standard loans but that’s nothing to worry about. As long as you can afford the payments and are rebuilding credit, you should be fine.


If you work with us, we can help you every step of the way, including with the application and preparation.


How can you get a subprime auto loan?


You can access subprime auto loans in exactly the same way you would access a standard loan. You work with a lender or dealership and select the loan you can afford from the options you’re presented.


The car loan market is an open one with lots of competition. That means rates are kept sensible and while still more expensive than standard borrowing, they aren’t as expensive as they once were.


Be prepared to have to prove everything within the auto loan application though. The lender will want to make sure you can afford the loan and the repayments so will check your application carefully.


They will want to see pay stubs or salary statements, bank statements, proof of savings and of any other income.


The more paperwork you can provide to prove you can afford the loan and that you’re getting back on track, the better.


Are subprime car loans the only way to finance a car?


Subprime auto loans are not the only way to finance a car. You could lease, you could wait while you rebuild credit, you could use a cosigner on a standard auto loan or you could use a coborrower to come in on the loan with you.


There are lots of options but it’s difficult to recommend a specific solution in a blog post. For specific advice for your situation, contact one of our team and we’ll be happy to help.


When you’re ready for a car lease or loan, get in touch with the Hannon auto loan experts at Northway Ford for great deals on auto finance.


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Categories: Car Loan

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