The moderation in subprime auto loans means that high-risk lenders can afford to be more selective. It also means that potential borrowers with less than perfect credit should check their credit reports, know their credit scores and plan on a larger down payment to maximize their chances of success.
To say that the loans issued by American Web Loan are predatory is putting it mildly – the interest charged by most payday lenders pales in comparison. The mere fact that tribal lenders can ignore the majority of federal and state lending laws should be a wakeup call to anyone considering this type of loan.
Typically, leased vehicles aren’t worth more than their residual value at the end of a lease. Consumers nearing the end of a lease, however, should first check their vehicle’s value before turning it in; otherwise, they could be leaving money on the table.
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.