Sub-Prime Borrowing

Good news for Sub-Prime borrowers: statistics show that Car Loan credit rates have decreased in the past couple of years and there is a reported surge in new car purchases, it nearly doubled in 2010 compared to 2009.

Due to loosening of credit and subsidizing by the automakers, interest rates on loans have come down which made car purchase more affordable.

Prime borrowers(with a credit score of 680-739) and Super-Prime borrowers(credit score of 740 and higher) were able to benefit the most of the revived sales trend. They are the customers who qualify for best deals and lowest rates. The Car Loan market is a bit tougher for the Sub-Prime borrowers(credit of 619 and below). These customers have to come up with a bigger downpayment and are likely to to get a higher interest rate. For credit-challenged buyers, the best option is a purchase of a used vehicle. Even though they still might be required to pay a higher interest, their chance of approval is higher since the credit criteria is lower, and the price of the vehicle is significantly cheaper.

A good tip for all types of buyers is to shop around for their loans and acquaint themselves with their options. One helpful tool in planning their budget is an online Car Loan Calculator. Even in case of  a Bad Credit or No Credit, financing is still available in lending agencies specializing in Second Chance Car Loans, such as First Class Specialty.ca.  Once you are pre-approved for a loan, you are well on your way to purchasing your dream car.