Most banks have strict rules about who can borrow money from them and what that money can be used for. You can't get a loan for a used car that is more than five years old. Loans for used cars have higher interest rates than loans for new cars. And people who are in the "subprime" category aren't given loans very often.
A subprime borrower is someone with bad credit. He might not pay his bills on time, or he might use his credit card too much. A person with a credit score below 620 is usually considered a subprime borrower. If your loan application was turned down because you are in this group of people with bad credit, does that mean you can never borrow again?
You can still get a car loan if you look for lenders who work with people with bad credit. Avoid lending companies that say "1.9 percent interest" on their signs. See the symbol (**)? In small print below the big ads, the ** means "only for prime borrowers" or "only for people with excellent credit." You aren't part of this good group, that's clear. When getting a car loan, people with bad credit will have less freedom. The rates of interest are very high. You could look for lenders online. But there are things you can do to make your life better.
First, you shouldn't put all your trust in the car dealer. He will always make a certain amount of money from car loans. In fact, it would be best if you could get a car loan before letting a car dealer come within shouting distance. Don't go with the first lender you find when you're looking for one. Compare the interest rates that different lenders are offering, but don't just take the average rate they give you. A lender might give someone with a credit score of 800 a lower interest rate and someone with a score of 600 a higher interest rate. Ask for exact prices. You could also talk to credit unions and banks where you already have an account.
You can also change your "category" by looking at your credit report and making changes to your credit score. For example, the information in your credit report might be wrong. The black mark on your credit history might have been caused by this mistake. You must get this mistake fixed right away by writing to the credit bureau and telling them about it.
Scores can change over time. If you always stick to your budget and pay your bills on time, your credit score is likely to go up. When your score goes up, you may be able to refinance your car loan at a lower rate.
