Why New York Consumers with Bad Credit Should Try to Avoid Subprime Auto Loans

 

Even though they work out for some car buyers, many New York consumers with bad credit should try to avoid subprime auto loans.Business is good for lenders that provide subprime auto loans to New York consumers with bad credit. Unfortunately, these types of loans are often very bad for car buyers in desperate situations. For the most part, subprime auto loans come with exceptionally high interest rates. This means that many financially-challenged consumers in New York end up paying far too much for the cars they need. Even worse, a large percentage of subprime auto loan customers eventually default on the loans. This leads to repossession, garnished wages, and ruined credit scores. Therefore, if you have bad credit in New York and need a car, your best bet is to look for alternatives to high-interest subprime auto loans.

How Subprime Auto Loans Can Destroy Finances and Credit Scores for New York Consumers

Luckily, the interest rate cap is set at 16% in New York. Yet, 16% is still a high interest rate for an auto loan. This is especially true if the subprime loan comes with a long term (six or seven years). Sadly, a lot of subprime car buyers in New York opt for longer term loans. They do this in order to keep monthly payments down. However, in trying to keep their car payments affordable, they end up paying more in interest charges over time.

Even if they keep up with all of their payments, having an expensive auto loan on their credit reports for six or seven years can still hurt their chances at getting approved for new credit. This is because these subprime auto loans inflate debt to income ratios for New York consumers with bad credit.

Granted, if they make all of the payments successfully, their credit scores might improve. However, this only happens when lenders report positive payment activity to the credit bureaus. Yet, if New York drivers purchase their vehicles from Buy-Here-Pay-Here (BHPH) dealers, this likely won’t happen. Because they do their financing in-house, most BHPH dealer/lenders in New York don’t check credit scores, and they don’t report payments to the credit bureaus.

When New York consumers miss payments and default on subprime auto loans, the real trouble begins. Lenders that specialize in these loans are typically ready to pounce at the first sign of delinquency. They repossess vehicles quickly, and garnish wages for deficiency balances after repossession. So, in the worst-possible case scenarios, already cash-strapped consumers are left without cars, yet still forced to pay off heavy portions of loans they couldn’t afford to begin with. In addition, they emerge with heavily damaged credit scores, making it even harder to replace the vehicles they lose in repossession.

How New York Consumers Can Avoid Subprime Auto Loans

Whether you have bad credit, good credit, fair credit, or no credit, if you need a car, you need a car. This is why so many New York consumers with less than perfect credit scores take out subprime auto loans. Of course, if you fully understand the terms and conditions of a loan, and know that you are 100% capable of paying it back, a subprime auto loan might work out. Just make sure that you work with a lender that reports positive payment activity to the credit bureaus.

However, if you can put off your vehicle purchase for a while, taking the time to improve your credit score before applying for financing will save you a lot of money in interest charges. Some New Yorkers even opt to purchase an inexpensive car with cash while they work on credit repair.

A better credit score is within reach of any consumer in New York who puts forth the necessary effort. You can start by getting current with all of your bills, paying them on time, every time, and by using credit cards responsibly.

Finally, the best way to protect your credit score is to check your credit reports regularly.

How New York Consumers Can Protect Improving Credit Scores by Checking their Credit Reports

Even if New York consumers know that their credit scores are less than perfect, they should check their credit reports while engaged in credit repair plans. This is a necessary action because about 80% of New York credit reports contain errors of some type. These flawed credit reports result from the mishandling of consumer information by creditors and the credit bureaus. Then, many of these inaccuracies, unfortunately, are significant enough to bring down credit scores.

So, protect your credit score by taking advantage of your rights under the Fair and Accurate Credit Transactions Act (FACTA). This federal statute permits you to request a free copy of your credit report from each of the major credit bureaus every 12 months. You can easily obtain your free credit reports from TransUnion, Equifax, and Experian by visiting www.annualcreditreport.com.

Then, while reviewing your credit reports, if you come across credit score damaging errors and mistakes, contact Credit Repair Lawyers of America in New York. The experienced credit attorneys at our firm work under the Fair Credit Reporting Act (FCRA) to legally fix credit reports for FREE. Just give us a call or fill out the convenient contact form on our website, and we’ll get you clean credit reports no matter what it takes. Even if we need to file lawsuits on a consumer’s behalf to get the job done, our clients never pay anything out of pocket for the work we do.

The Free and Legal Way to Get Better Credit in New York

Don’t let errors on your credit reports bring your credit score down. At Credit Repair Lawyers of America, we’ve been cleaning up credit reports for consumers since 2008 for free. How do we do it? All of our fees come from the defendants in settled cases. This is why our clients pay nothing for the work we do.

Let’s start the conversation about what we can do for your credit. Set up your free consultation today by calling Attorney Carl Schwartz at (646) 859-3045 or sending him a message through our contact page.

For more information about Free Credit Repair, please visit https://creditrepairlawyersam.com/credit-repair-free/.