One of the tools that lenders have to be able to provide credit to people with risky credit is the use of subprime lending. This simply means that to get credit, you’ll pay a little more interest on the loan and there will be a few more rules to follow in the payment terms.

Your credit can cycle throughout your life. Sometimes it’s good; sometimes, not so much. Your credit and credit rating can be affected by a number of things:

  • Not enough credit/debt experience
  • No property that can be used to secure a loan
  • Excessive debt
  • Late or missed loan payments
  • Legal actions
  • Foreclosure
  • Bankruptcy

Any one of these can keep you from getting an auto loan. The subprime lender charges a little more to cover their risk because they can’t tell from your credit how likely you are to make all of your payments on time.

To help your chances, work on those areas on your credit that are obstacles:

  • Get a credit card from a store or company that caters to people with no credit. Use the card and pay off the balance. Build up your credit history this way.
  • Work with debt consolidation and your lenders to create a payment plan to reduce your debt. Agree on payment amounts you can afford and make all payments on time.
  • Ask lenders if they will take late payment notes off of your credit report if you pay off or start paying more on your balance. Lenders may agree to such things to get their money from you.
  • Foreclosure and bankruptcy puts you in the position of rebuilding your credit from scratch. Take out some small loans. Get a credit card or two. Maker regular payments and keep balances low.

It does take credit to get credit. The more responsible you are with your finances, the more likely people will want to lend you their money. And while you are building up your credit, subprime lenders are available to help you create a positive credit report.