Prime and Subprime Auto Loan

The introduction of auto loan facilities to applicants who were earlier rejected because of their low credit score has led to the belief that credit score isn’t seen when approving finances to the borrowers. However, this is far from the truth considering the fact that the lending experts have divided the loan into two divisions termed as subprime and prime auto loan facilities. The subprime auto loan facilities are those in which the applicant’s credit score is average or below average and there are still some problems and debts left to be paid in his/her credit report.

As opposed to the aforementioned, the prime auto loan facilities are the conventional loan facilities in which the applicants are provided the finances at a very decent and low rate of interest. Another difference is that of requirement of the down payment. Some subprime loans come without down payment but the interest charged on them is astronomical which should certainly be avoided. In case of the prime loan, the down payment is usually waved off considering that the credit score acts as the collateral on behalf of the applicant and makes it easier for him/her to get the approval without any difficulties or major requirements whatsoever.

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