Subprime Car Loans: Save Thousands by Choosing the Right Lender

Choosing the right lender is the single most important step, and can save you thousands of dollars over a typical finance term.

By Metroland Media Group Wheels.ca

Apr 17, 2017 4 min. read

Article was updated 5 years ago

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New to the country or have less-than-perfect credit history but need to finance a car? Subprime car loans are the quick answer. But tread carefully here — choosing the right lender is the single most important step, and can save you thousands of dollars over a typical finance term.

Numerous unethical subprime finance companies operate across Ontario. With these organizations, you can end up paying thousands more than a vehicle’s actual value.

Just look at what happened recently to a couple in British Columbia. They were desperate for a car and settled for a subprime loan, as they had a bankruptcy on file. Their lender sold them a Dodge Avenger worth $21,000 for an eye-popping $44,000 over the length of the finance term. Seems unfair? Unfortunately, such problems are only the tip of the subprime iceberg.

Unethical tactics to watch out for:

Most financing companies today will consider you a subprime customer if your credit score is below 670. Once that happens, they will try to maximize their profits by using a number of tactics, some of which are listed below:

●    Most subprime lenders will dictate car financing terms and will not offer any room for negotiation. They will make you accept whatever they are offering.

●    Most lenders will not declare the prices of their used vehicles until you receive a loan approval. This allows them to jack up the price of a car to your maximum approved loan amount. Let’s say you are approved for $14,000 — they will sell you a car worth $10,000 for the full $14,000, and pocket $4,000 of your money.

●    Some subprime lenders pile on administrative charges, in direct violation of Ontario Motor Vehicle Industry Council regulations.

●    Some organizations that appear to be lenders actually don’t have a vehicle inventory. These companies secretly sell your information to another subprime player for a fee.

●    Many lenders will not even allow you to select your vehicle. They will choose one for you — probably one they cannot readily sell.

Practices like these make the Canadian subprime market complex. Fortunately, some car finance centres are notable exceptions, and have built a reputation of genuinely helping customers.

Noel Prefontaine, former punter and kicker for the Toronto Argonauts, is one who advocates strongly for ethics within the industry. Since his retirement from Canadian football, Prefontaine has become an auto finance specialist, working with hundreds of consumers across the GTA.

Prefontaine has severed ties with big-name subprime lenders in the past due to their questionable practices, and now works with Performance Car Loans in Brampton, a company that values honesty and transparency over profit.

Prefontaine encourages Canadians to carefully do their research to ensure they are working with an honest and ethical auto finance centre.

Practices of an honest subprime lender

Ethical car finance centres such as Performance Car Loans operate on a transparent business model. The company clearly lays out its minimum criteria for a loan approval, requiring you to have been working for at least six months and be earning a minimum of $400 a week, without major obligations.

Here are some practices Prefontaine has identified that set ethical car finance centres apart:

●    All cars are priced according to Market Value Pricing. This means you pay exactly what a car is worth, and not a penny more.

●    The centre has a large on-site inventory, where all vehicles are clearly windshield priced so that there is no risk of being conned into paying more. For example, at Performance Car Loans, over 350 pre-owned vehicles are in stock, and you’re welcome to see them before stepping inside the office.

●    You are free to choose any car that matches your approved amount. You can opt to utilize the full loan or go for any value below it.

●    Ethical centres will never sell you a car with a questionable history. Their inventory has only well-maintained vehicles with a transparent CarProof report.

●    The centre offers a personalized experience to every customer, prime or subprime. They work to improve everyone’s credit rating.

●    You should not have to pay high interest rates for more than one year with an ethical company like Performance Car Loans. If you keep up timely payments for 12 months and maintain or increase your income, the company will work hard to qualify you for better rates and convert your financing arrangements.

If you need to access financing without a strong credit score, do your research and you will save thousands of dollars. For you, choosing an ethical auto finance centre will be the single most important step in your car-buying journey.

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Performance Car Loans is southern Ontario’s biggest automotive finance centre, offering customers a vast selection of vehicles and a positive purchasing experience. We guarantee to find you the best rates in line with your circumstances, and will go above and beyond to help you secure an affordable car loan. Bad credit or no credit, we work hard with a wide network of reputable lenders to ensure you get approved and behind the wheel of your favourite car. 1(888)856-2872.  




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