Subprime refers to people who have poor credit scores due to late payments or bankruptcy. If you have poor credit scores or you don’t have a credit history and are looking for car finance, subprime car finance is a great option. There are many subprime car finance lenders in the UK. Therefore, if you have bad credit, you can still get car loan in the UK. This is what you need to know about subprime car loans and subprime car finance lenders UK.
What is a Subprime or Bad Car Loan?
Subprime loans are loans that are tailored for people who may struggle with a steady repayment schedule. There are lenders that specialize only in subprime car finance while you can also get these loans from mainstream lenders. Some of the reasons that can make a lender be classified as a subprime borrower are a bad credit score, lack of credit history, bankruptcy, and huge debts. Such reasons can make a borrower be directed to subprime borrowers. To leverage the high risk posed by borrowers, lenders end up hiking interest rates.
What are the Risks of Subprime Loans?
There are many dangers associated with subprime car finance. Among the risks to the buyers is that if they do not understand the loan and cannot afford it in the long run, they may end up defaulting on the loan.
- Failing to make the repayments could make the car to be repossessed. This could hurt your credit score even more and could lead to your car being repossessed.
- Subprime loans could also potentially damage the car market in case of an economic shock. If borrowers are unable to repay their loans, car dealers could face a significant fall in revenues.
- High interest rates. Subprime car finance often attracts high-interest rates compared to conventional auto loans. Lenders charge high interest rates for subprime loans to leverage high risks posed by poor credit scores by borrowers.
- Other fees. Apart from the high interest rates charged on subprime loans, the other risk is extra fees. Among the fees you are likely to be charged include processing fees, origination fees, and prepayment penalties.
Subprime Car Finance Lenders UK
There are many subprime car finance lenders in the UK that can help you with car finance. You can shop around to get the best deal from any of the following subprime car lenders UK.
Buy a Car
Buy a Car is a subprime car lender in the UK. If you have a poor credit score, you can still get car finance. They offer options for people with poor credit scores to buy a car through subprime car finance. They offer the following subprime car finance options; subprime hire purchase finance, subprime contract purchase finance, subprime hire purchase finance. They allow drivers with low rate finance to use guarantor finance. The guarantor must be willing to make your payments if you fail to do so.
Pay as You Go Car Credit
Pay as You Go Car Credit is a family-run business that specialized in subprime car loans. The business has been in operation for the last 10 years and offers high-quality customer service. If you want to borrow a loan and you have bad credit, they can help you access subprime car finance.
They are based in Liverpool and they can help you with debt counseling. They offer subprime car finance based on individual circumstances and your personal requirements. You just need to make an online application, and you can get accepted within an hour. Once you are accepted, they will pay the dealer and you can choose your car.
Stoneacre is a car lender in the UK that also specializes in subprime car finance. If you have a poor credit score or no credit history, they will still offer you car finance. Besides, if you can’t get subprime cat finance with them, they work with multiple lenders and can help you get one. You can make an initial application that will not affect your credit score. You can also check whether you are eligible for subprime car finance from Stoneacre without hurting your credit score.
Carzam is also a lender that specializes in subprime car finance UK. They offer car finance that is personalized to an individual based on their individual circumstances. You can use their cat finance eligibility checker to see the chances of being approved. You need to fill in an online form to get personalized terms when applying for car finance, and it won’t hurt your credit score. Their rates start from 9.9%.
Midland Credit is a car finance lender in the UK that also offers subprime car finance. You can use them to buy any cat from any dealer. You don’t need to pay any fees or make a deposit. You can apply for car finance with them even if you have poor credit. You can calculate your repayments using their finance calculator. To get started, you need to make a simple online application by filling in a form and they will review your application. You can get approved within 1 hour without hurting your credit score.
Fund My Car Scotland
Fund my Car Scotland is a lender in the UK that can help you get subprime car finance. The lender works with a panel of lenders that can also help you get car finance. You need to make an application online and you will be asked a few questions about your employment and credit status. Once approved, you can choose your car and they will pay the dealer. You can then pick up your car from the dealer.
Summary of Subprime Car Finance UK
If you have extremely poor credit scores, you can apply for subprime car finance from the above lenders. Subprime car lenders are good for people with poor or no credit scores who cannot get car finance from mainstream lenders. However, it is worth noting that subprime car finance is expensive and poses a risk of repossession of the car to the borrower in case of inability to make repayments.