Do Subprime Auto Loans Hurt Your Credit?
Some people are often not keen to ask questions about subprime loans, but they’re a common type of loan used by many who are either rebuilding their credit or are new to building credit. Subprime loans are just like any other loan, where they can hurt your credit if you don’t make proper payments, but if paid off correctly and on time will greatly improve your credit and help you out in the long run. Our team at Davey Auto Sales wants to help you fully understand what subprime auto loans do to your credit. Below we’ve broken down what a subprime auto loan is, and how it works on your credit.
READ MORE: How do Subprime Auto Loans Work?
What is a Subprime Auto Loan?
As we outlined above, a subprime loan is made for those who are rebuilding their credit or are entirely new to credit. Subprime loans are for those in the fair credit range. Due to this, lenders take on more risk with subprime loans, which equals a higher interest rate for the person getting the loan. People with lower credit scores are not proven to be able to pay back their loan—whether by past experience or no experience—as compared to those in the prime range, and come with higher risk due to their unproven nature. Subprime loans fill in this gap to assist borrowers to improve their credit and eventually work their way up to being proven, and thus being able to get a better loan and rates.
How a Subprime Loan Works on Your Credit
Subprime loans, in and of themselves, are not especially different from any other loans, just in how they are applied to. Due to this, they affect your credit like all other loans. Where things will become negative for you is in actually paying said loan off on time and on schedule. Payment history is, perhaps, the biggest feather in your cap when it comes to your credit score, so if you have a subprime loan be sure you are paying on time each month. Keep on top of your finances, make sure you will always have enough to pay it, and consider setting up automatic payments if you’re often forgetful to do so manually
Get a Subprime Auto Loan at Davey Auto Sales
Our Davey Auto Sales finance team have years of experience working with people with all kinds of credit who are looking to get into a vehicle. We’ll work with you to find the solutions to your current financial situation, and put you on a plan that you’re able to afford. Explore our vehicles, and find out what loan you’ll be able to manage, all at our Oshawa dealership, assisting everyone in the area with needs just like you since 1977.