subject: What Is Sub Prime And Can I Really Get Approved If I Have Bad Credit? [print this page] So, lets start by clearing up what exactly is sub prime? The measure of sub prime is determined for an individual whose credit score is below 680. Even one point makes a difference so a person at 679 and 680 are in two totally different categories. People with no credit or poor credit fall into the sub prime category when it comes to financing for a car loan. What exactly is involved in getting a car? Firstly, you have the option of paying for a car in Cash. That doesnt necessarily mean you have to come in with $10,000 in hundreds but what it means is that you would be giving a cheque for the full amount of a vehicle to the place you are purchasing. This is not the most common option as most people dont have that kind of cash sitting around. So, what most people need to do is get a car loan.
These loans will either be from a bank or other lender. What are involved in getting this loan are a few things but one important factor is your credit score. Thats where the prime/sub prime situation comes into play. The general rule of thumb is that if your credit score is good that you have shown a pattern of paying your debts on time and are seen as a low risk customer. When someones credit score is not so good, it is more difficult to get a lender to lend you this money for a car. Dont despair though because that is why there is a category for sub prime lenders. Generally sub prime car loans come with a higher interest rate and or a shorter term.
The good news is that there is a market for sub prime customers and there are sub prime lenders. The design of some dealerships is to help customers rebuild their credit in the following ways. When you purchase a car and get financing from a sub prime lender, you are showing the credit union that you are making regular payments so that is a great way to get your credit score to rise. Also, if you are borrowing money from a lender or bank for your car loan and showing consistent payments, you become a better customer in their eyes. This may result in them offering you other products that you may not have been eligible for before but are now in the position to obtain some of these other products. So, start with a car loan and make your regular payments to your lender and you will find your credit score improve and even possible favour with your lenders for some other products.
