Here at Approved Loan Store, we work with customers with all sorts of credit situations. While we help out plenty of customers with good credit scores find a better deal, our specialty has always been working with consumers who have subprime credit.
Now, the term “subprime lending” has become a loaded term because people associate it with subprime mortgages, but there are enormous differences between the subprime auto and mortgage industry as outlined this week in an article by Business Insider.
There are two main reasons why subprime auto loans are not the same risk of subprime mortgage loans. First, consumers default less on auto loans than on mortgages. Car repos happen much quicker than foreclosures, so consumers feel compelled to keep up with their payments. Besides that, a car is necessary for many people to make it into work, especially in areas of the country without public transportation options. If they don’t have a car, they have to rely on other people for a ride to work, to the grocery store, or to go out on the town. Most people will make cuts where they need to so they can maintain their car and their independence.
Second, subprime auto loans are not nearly the same risk for lenders as subprime mortgages. This is why so many of Approved Loan Store’s lender partners have been able to offer these auto loans to consumers with very low credit scores while they would deny that same consumer for a credit card, a mortgage, or a personal loan. For this reason, auto loans are a great way for consumers with challenged credit to re-establish themselves and build up a positive payment history. We call this the “Everyone Deserves a Second Chance” effect.
Are you looking to get into a new or used vehicle? Approved Loan Store wants to help, even if you have bad credit, good credit, or so-so credit! Fill out our secure online auto loan application today, and keep up with the latest in credit and auto news by liking Approved Loan Store on Facebook, following Approved Loan Store on Twitter, and subscribing to Approved Loan Store on YouTube!