Why the Thought of a Subprime Car Loan Has You Biting Your Nails
The following scenarios may sound familiar if you’ve been denied a car loan due to bad credit. You dial the number of a lender, waiting for someone to answer and when an agent picks up, you hung up. Or maybe you’ve been in contact with a sales agent, but feel reluctant to return their calls, perhaps ignoring a few of them. It all begins with having bad credit.
Being told you’re not eligible for a prime auto loan may ring in your mind like the diagnosis of a serious condition. There’s more to it than the rejection. Not only is it an outward consequence of poor credit, it is an emotional wrecking ball that can break your confidence and bring on anxiety about your finances.
To make matters worse, the alternative available to you – the subprime lending in the auto market – might not seem too appealing because of what the public thinks and says about it. But if your only option is a subprime auto loan, should you feel like you’re heading into dark territory? Or should you feel guilty for your predicament? The short answer to these questions is no, but there are a million reasons why subprime customers feel differently.
There’s the Stigma
When a person sinks under financial problems, it’s common for others to blame it on irresponsibility. There’s an assumption that poor finances are the result of a careless individual who simply isn’t good with their money. They chose not to pay their bills on time. They chose to spend on things they couldn’t afford. They chose not to save…and so forth. Everything is a choice. And if you are dealing with financial problems, you may have had someone criticize you of these things.
Even some of the associations people make about people with bad credit are exaggerated and sometimes, absurd. Family members and friends could assume that a loved one is throwing their money on things like shopping sprees, alcohol or on vacations which they can’t afford. None of these assumptions might even be remotely true.
Unfortunately, your financial status is a big part of your identity (especially in Western cultures), and people may avoid dealing with you for certain activities or pursuits if they feel you’re bad with money (ie. business, marriage).
Sometimes, people do make bad choices and have no one else to blame but themselves. But even then, there are people who are sometimes forced to overspend or clean out their savings due to accidents, illnesses or natural disasters.
And Then There’s Shame…
What happens when you have an issue that’s stigmatized? You’ll naturally feel a sense of shame. As mentioned before, there are people out there who will put labels on you, because your finances aren’t in the best shape. You may still feel that sense of guilt even if no one says a word to you. Society, parents and financial institutions have conditioned you to put money management high on your list of priorities (for good reason).
There’s also the issue of personal responsibility. If you have a family, seeing your spouse and children feel the effects of your money troubles can leave you feeling downhearted. If you are a young adult, you might feel like you’re not living up to the standards set out by your parents or mentors. When these thoughts echo in mind, it’s hard to see any sort of light in your situation.
That feeling of shame can make it difficult for you to reach out for help, even if it means working with a subprime lender. It’s tough opening up about your financial struggles, although it is first step to finding your way out debt and credit problems. It’s one of the reasons why many people are hesitant to seek help in whatever form it may come (whether it’s through credit counselling, lender etc).
Why You Shouldn’t Fear Subprime Lending
It’s understandable to feel anxious if you’ve never dealt with subprime lending before. Just the idea of having bad credit alone can be frightening for you. However, it’s crucial to remember that these loans can work in your favour, and many of the companies who provide such loans are there to help you.
They’re Not Permanent
A lot of people with bad credit believe that their money problems will stay with them for life. And it’s just not true. If you have this feeling, keep in mind that you can start to reverse your credit within a year or so, and qualify for lower rates once your score improves. A poor credit score is not the financial death sentence that so many people think it is. When put into perspective, these loans can be a tool that helps you rebuild your credit, providing you make your payments on time.
Trustworthy Lenders are Looking Out for You
There are some companies out there in the subprime auto market that are “sharks”. They’re just looking out for your money instead of you. However, there are many companies out there who genuinely want to help you out, looking to get you approved for a loan that fits your budget and circumstances. Some companies will go even further by assisting you in the vehicle selection process. These are the lenders who will listen to your specific needs, as opposed to catering to your wants alone. So don’t be afraid to open up to them.
It’s Not the Market, It’s the Mindset
Subprime loans aren’t bad in themselves. There are a lot of news articles and so-called money gurus who call these loans (and the entire industry) as unethical. These experts believe it’s manipulative to offer such loans to give to people with bad credit, because they’ll have difficulty paying them off. Again, it stems from the perception that the individuals who rely on such financing are bad with their money.
However, they need to think about the millions of individuals who are dealing with difficult circumstances and need a car to make their lives easier. It would be unfair to ignore them. What you need to keep in mind is that subprime loans carry opportunities and risks like a prime loan would. Of course, there are differences, such as the terms and conditions and interest rates. Ultimately, what matters most about these loans is the way they can get you out of your dilemma.
Don’t let the stigma of these loans get to you. There are heaps upon heaps of people who once battled credit issues, and are now financially free or stable. No one is immune to making poor choices with their money or facing difficulties in life. All you can do is to turn the tables when these hardships arise, and subprime lending can help you accomplish that.