Although the average price of a new car is a bit more affordable, borrowers should choose a reasonable vehicle if they’re financing one with a subprime loan. Doing that as well as maximizing the down payment while keeping both the loan term and payment-to-income ratio to a minimum will go a long way towards ensuring the successful completion of a high-risk car loan.
When credit-challenged buyers are given the option of financing a new car, we suggest picking a model that’s affordable, fuel efficient and inexpensive to insure. Borrowers who do this will find themselves in a much better position down the road once they’ve reestablished their credit.
As we see it, while subprime lenders continue to loan to higher-risk borrowers, any major increase in delinquencies could lead to a reduction in the number of loan approvals.
Since insurance can be particularly expensive for credit-challenged borrowers, these consumers need to carefully weigh whether or not they should file a claim with their car insurance carrier – especially if the damage is only a few hundred dollars above the deductible amount.
Despite its shortcomings, the new Hyundai Rewards program further solidifies Hyundai’s position as the leader in finding innovative ways to approach automotive sales and service. That’s because this newest program has the potential to help at least a few credit-challenged buyers save hundreds and perhaps thousands of dollars on a new car. We can only hope other manufacturers will see the benefit and follow Hyundai’s lead.
Latest report from Experian Automotive showing that the percentage of loans to subprime buyers is moderating could prove to be a wakeup call to many credit-challenged consumers
If you have problem credit, it’s important to realize that taking out a subprime auto loan (or any auto loan, for that matter) will require that you buy full coverage auto insurance. And while it’s important that you get the right deductibles for both collision and comprehensive coverage, it’s also necessary that you have enough liability coverage, as well.