Sub-Prime Car Financing in Youngstown, OH

If you are someone with a less-than-perfect credit report, it’s probably hard to relate to television and radio commercials for auto dealerships. The ads target the big spenders, the people with high FICO scores and money in the bank. But you don’t hear much on these ads about the other end of the spectrum — people with credit problems.

Sometimes credit problems happen to hardworking people when they least expect it. At #1 Cochran Youngstown, we are willing to work with people who are looking to buy a car with bad credit in the Youngstown area. Don’t pre-judge your credit. Through our relationships with local lenders, we can help get you approved. Here are a few things to know about subprime financing for vehicles.

What is a Subprime Car Loan?

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Subprime car loans provide a way for people with low credit scores or who have not yet established a credit history to purchase a car. Because of the underlying circumstances for the borrower, subprime loans offer higher interest rates as they represent an enhanced risk for the lenders. According to Investopedia, they may also come with prepayment penalties if you decide to pay the loan off early.

Subprime car loans play an important role, and you should not be embarrassed about needing one. It is common for people to suffer financial setbacks that are not of their making. Situations such as layoff, illness, or divorce can cause significant financial difficulties that lead to credit problems. Let #1 Cochran Youngstown help find you a loan so you can get the car you need to continue rebuilding your credit.

What Is a Credit Score and Why Does It Matter?

A credit score is a mathematical calculation based on your history of on-time payments on all your debts, including your mortgage, auto loan, credit cards, or other installment accounts. The goal of the credit score is to give lenders a sense of the risk they may face in approving you for a loan. 

Remember that, for lenders, money is their “product.” They make money on the interest payments you make on that loan. But they also want the money they lent paid back in full. Otherwise, they will lose money and, if that happens enough, they will be out of business.

Credit scores include many factors in their calculation. These include the age of your accounts, how much credit you are using, the number of new credit applications, and any derogatory actions against you such as bankruptcy or collections activity. 

But credit scores are a prediction and cannot capture information about the circumstances of your debt or your character. At #1 Cochran Youngstown, we understand the complex circumstances we face in life. We will do our best to consider those factors and find a loan that fits your budget.

How Do Credit Scores Affect Car Loans?

You do not need to achieve a minimum credit score to qualify for a loan. What will happen, though, is that as your credit score goes down, your interest rate and other terms go up. 

This increases the amount you will pay in interest, but there really is no way to avoid this if you want a car to drive. Every time you make a successful car payment, it has a positive impact on your credit score. With patience and determination, you can escape the subprime category for your next vehicle.

Credit Karma, a credit monitoring site, offers this example of what the differences in interest rates might be on a used car, correlated to your credit score:

• Deep subprime (credit score-300-500): 13.97%.
• Subprime (500-600): 11.33%.
• Non-prime (600-660): 7.14%.
• Prime (661-780): 4.21%.
• Super prime (781-850): 3.24%.

Interest rates will be slightly lower on new cars. One of the reasons, according to AutoTrader, is that manufacturers prefer that you buy new cars and want to make it more enticing. It’s important to understand that your monthly payment may be as high or higher since new cars have a higher sale price.

Other Options for Finding a Vehicle with Bad Credit

Being in the deep subprime or subprime category may sharply limit your options and result in an unsustainable payment — but all is not lost! There may be some additional options that can help you get to a level of affordability, according to Credit Karma. 

One option is to find a co-signer with a better credit profile. Purchasing the car with a friend or family member as a backstop can get you approved or a more favorable interest rate. 

Other than that, you can take steps to improve your score, but it may take time for your efforts to take effect. In the meantime, you could save for a down payment. A larger down payment will reduce how much you need to borrow and lower your monthly payment.

You could also focus on improving your credit score. You do that by making sure you make all your payments on time — late payments hurt your score. Paying down your debts to reduce outstanding amounts you owe can allow for a substantial credit score improvement in a short period. Having credit cards at the credit limit is not a favorable element of your credit score.

On Your Side at #1 Cochran Youngstown

Your credit score does not define you. When you need a car, the team at #1 Cochran, serving Youngstown, Ohio and surrounding areas, will be there for you. We will work hard to find a solution to your credit problems because we know a vehicle is essential to contributing to our economy. We are confident we can get you approved for a loan and once we do, you will have plenty of selection to review. 

We offer the latest new models from Chevrolet, Buick, and GMC, along with a diverse inventory of used cars, including models from all the major manufacturers such as Cadillac, Ford, Honda, Jeep, Land Rover, Nissan, Toyota, and more. We also offer certified pre-owned vehicles from Chevrolet, Buick, and GMC, which come with additional benefits in terms of maintenance, warranties, and pre-sale certifications.

As a full-service dealer, we also provide financing support along with post-sale service and support. We’d love to work with you. Call us or contact us online today.