TYPES OF AUTO BUYING BANKS
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PRIME BANKS
These banks will finance customers with Credit scores 640 or better. These banks do not offer First time auto buyers financing. They typically ask for two to three active trade lines to be considered for a loan. It also depends on the amount financed.
For Example:
A customer who has paid off an Auto trade line that had the full amount of $15,000 financed can not jump to a $60,000 vehicle with zero down and expect the bank to do it.
Take your time. Go for $30,000 with investment/down payment to help your approval. Make more sense that way.
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These banks typically like customers to invest 20% or more of the vehicle's sales price for approvals with rates less than 6% depending on your individual credit history.
PRIME/SUBPRIME BANKS
These banks look a little closer at your credit file. They are the banks that say yes to scores in the 500’s range with no prior multiplications, just setbacks. They look at your Auto Fico to determine whether or not they will consider to buy your deal structure. These customers have a good Auto payment history, a couple of slips on credit cards and might have a mortgage with one or two late payments not current but old. These banks may offer you an approval with stipulations.
(Proof of income, Proof of address and insurance coverage on the current vehicle of purchase.)
They offer rates to customers higher than 8% and in the teens at most.
Note: They even look at first time Auto buyers with the right investment/down payment.
SUBPRIME BANKS
These banks offer customer financing to customers who have credit issues. They approve customers with past/present repos, bankruptcy discharges, credit card charge offs and home foreclosures. Your rates are higher, in the 20% 's range due to risk. They require a minimum of $2,000 or more down for approval. This is the bank that will help re-establish your credit file. Don’t be picky of the brand if you have a minimum amount to place down. At this point in your life, you should be thinking about your long term credit and not an image or status. You will get back to that in six months or a year of great payment history.
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DEEP SUBPRIME BANKS
These banks don't care if you have just got into Bankruptcy, foreclosure, repo, credit card charge off etc....( Where there's a will, there is a way.) They look for the sweet spot customer. This customer is desperate for a vehicle or to get credit back on track with money down. ( Note: No bank likes mid 400’s credit score range but with the right investment/ down payment. You may have a deal.) The banks require and look closely at your proof of income, proof of your residence, job verifications, personal phone verification for a welcome call and require about 10 or less references. (First/last name, number and relationship.) Insurance needs to be covered and have proof of coverage on that vehicle of purchase. The deductible needs to be $1000 or less for bank approval. (Note: Some of these requirements are needed for subprime banks also.) Your rates are typically in the high 20’s, no more than 28% range.
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