Has your credit score taken a hit from the recession? Don’t worry. You certainly aren’t the only one. More than 25% of US consumers have credit scores low enough to be considered subprime, and we’re here to help. We work with a wide array of dealers and lenders in Alabama, many of whom are known for helping people with bad credit.
When you apply online, we match you with a lender based on where you live, your income, and your FICO score. We’ll create an account for you in our approval center, where you will be notified of your approval status within 24 hours.
Subprime Auto Finance Rates in Alabama
Higher rates of interest are a fact of life when your credit score is 620 or lower. Your quoted interest rate will depend on a variety of factors, including your loan provider, credit score, loan type, financing term, and other criteria. Here are a range of rates based on our experience in the industry.
|FICO||Used Vehicle APR||New Vehicle APR|
As you can see, these rates are quite expensive. Fortunately, there is a lot you can do to minimize the total interest you end up paying. Firstly, avoid a prolonged repayment term like 5 or 6 years. The longer it takes pay off the note, the more you’ll pay in interest. Second of all, decrease the amount financed by offering a down payment.
If you want to pay less in total interest, consider the following:
- Go with 36 or 48 month financing. With shorter financing, you’ll pay less in interest.
- Offer a down payment. A down payment will help reduce how much you have to borrow, and consequently how much interest you pay on it.
- Resident of Alabama.
- Annual income of $18,000 (pre-tax).
- Employed for at least 1 year.
- All bankruptcies discharged.
- No repossessions in the past 12 months.
Financing a Used Vehicle
This varies from dealer to dealer, but we’ve listed several of the common requirements here.
- Vehicles may be new or used.
- No more than 75,000 miles on vehicle.
- Vehicle 6 years old or newer.
- Minimum loan amount of $7500.
Many lenders also require that you purchase your vehicle from a dealer with whom they have a relationship. If you’re approved through a dealer, then not surprisingly they will want you to choose a car or truck from their lot.
Do I Need a Down Payment?
For buyers with low credit scores, down payments are likely to be required.
That’s because they reduce the risk to the loan company, because if the vehicle has to be repossessed, they have a better chance of recouping their investment. For you, the borrower, there are benefits too. You will pay less in total interest, simply because you’ll be borrowing less, and you won’t be as vulnerable to negative equity.
Some dealers do allow buyers to finance vehicles with zero down. If your lender offers you this option, just make sure you don’t plan on trading in the vehicle before you’ve paid back the loan. You could easily end up in a negative equity situation.
Credit Restoration Through Financing
So long as you make all your payments as agreed, a car loan can raise your FICO score. The auto loan pay-off itself is not as important. Rather, it’s the months of making payments in time. As a result, it’s best to finance a reasonable, affordable vehicle.
To help keep your payments affordable, allocate 10% of your income to your monthly payment, at most. By way of example, let’s have a look at the average numbers for Alabama residents.
- Monthly Income: $1,957
- Total Transportation Budget: $352
- Recommended Payment: $196
- Remaining Funds for Fuel, Maintenance, etc: $157
Of course, you have to adjust these numbers to your own budget.