I just got an offer from Summit Acceptance Corporation (which was bought by Capital One in 1997) for a car loan "up to 30k". I really do need a car at this time since I currently drive a clunker which is ready to pass out at any given moment (and it will probably be during rush hour, on Friday afternoon, in 90 plus degree weather, at a stop light, at a busy intersection, in front of a BMW driver). I did some research and found a site that calls Summit Acceptance Corporation a company "focused on the upper end of the sub-prime market". I have a 5 paid collections on my credit report right now. They will be purged in September this year. After they are deleted will I no longer be considered "sub-prime" and be eligible for conventional loans from brand name lenders. And if I go ahead and accept Summit's offer, will I be foolishly labeling myself as sub-prime for life by having their trade line on my credit report, even after all negative information is deleted? I guess my basic question is once you are sub-prime, what does it take to get prime again. Thanks for any competent responses.
RE: Sub-Prime Car Loans. Need Leslie By getting a sub-prime auto loan once, you won't label yourself as sub-prime for life. In September, when your bad stuff drops off, you will be eligible for prime offers. More than likely your loan app will be based on your score and debt/income ratio. If you are a member of a credit union, I would suggest applying with them, they may give you a prime rate because your a member. 2 years ago when I bought a new SUV, I received a "B" rate loan, which is about 13%. At that time I had a couple of paid collections and 1 30 days late. Last October, I bought another new SUV and financed it with my credit union. The difference this time was that the paid collections had dropped off, the account with the 30 day late is paid off and closed. End result was a 6.75% rate for a 35K loan. Good Luck JP (JP from OK)
RE: Sub-Prime Car Loans. Need Thanks JP for taking the time to respond. Your information helps alot and I think I'll probably wait until I can qualify for a prime rate.
RE: Sub-Prime Car Loans. Need Leslie Good idea. If you can wait it out, it will pay off to the tune of thousands of dollars in interest saved. Regards, JP (JP from OK)
RE: Sub-Prime Car Loans. Need Keep in mind that auto loans aren't as difficult to get as credit cards or other unsecured loans. If all that's wrong with your credit is paid collections, you might still be able to get an auto loan without having to go the sub-prime route, which can mean a considerable down payment. Before you accept the first thing that comes along, shop around. Check with dealers in your area. Many have access to a wide variety of lenders, which increases your chances for financing. Then, go for the best deal you find. This will be a major pain in the ass, but it could save you lots of money. One option you'll find at most GM dealerships is Nuvell financing. It's wholly owned by GMAC, and it's for those who don't qualify for conventional GMAC financing. I have no idea if it can save you money, but it's something to look into. I wish you the best of luck. Pray for patience! Shopping for an automobile and financing is bound to be the equivalent of labor and childbirth!
RE: Sub-Prime Car Loans. Need Not to contradict Doris, because she's always right on...but be careful about shopping around at car dealerships. They are out to make money, so it doesn't help them to get you the lowest interest rate or the best terms. They also have the habit of shopping your application around to about 10 lenders which adds more inquires to your credit report. It's been said that the credit scoring system will lump similar inquiries made in a short amount of time together and won't affect your score that much, but I have yet to see proof of this. It certainly lowered mine. I had to go with a subprime lender because I wrecked my car and didn't have a down payment. My credit was also the pits. I've accepted my situation and plan to keep the car for two more years, but to give you an example of the situation I'm in..I am about $4000 upside down on this car. That means unless I can come up with a huge down payment, my best bet is to pay the car off and trade it in. Of course, by the time I trade it, I won't get much for it and will still have to come up with a down payment. In the meantime, I pay $9 a day in simple interest on the loan. That means, over half of my payments go to interest. The first 8 payments I made on the car went straight to interest. I urge you to go to your credit union (if you don't belong to one, find one and join) or your local bank. With check in hand, your are in a better negotiating position. As Doris said, patience is the key. It may seem like it's costing you alot, but compared to the Sub-prime interest you'd pay, it's nothing. Keep getting that oil changed and use Plus or premium gasoline..You'll get there. Good luck and God Bless!
RE: Sub-Prime Car Loans. Need If something should happen to your car before your credit is clear, take the sub-prime loan. Then refinance when your credit will allow your to obtain a prime rate!
RE: Sub-Prime Car Loans. Need When I found a car I wanted to buy I had a couple of "errors" on my report that prevented me from getting traditional financing. I took the note with the sub-prime, and then when my "errors" were erased, I re-financed with a small local bank. It worked out great. One other thing to watch out for: The sub-prime lender did NOT report my account or 4 mos. of perfect history to the bureaus. As a result, I lost out on some good history plus a paid $20K loan.
