For subprime borrowers, there’s a lot of uncertainty when it’s time to get a car loan. Although borrowers with bad credit may be able to get financing for their car, they generally have to pay higher interest rates, make larger down payments or add a cosigner to get the loan they need. Those with a history of late payments, judgements, defaults or repossessions also could have a difficult time finding a lender.
Exeter Finance is one option for subprime borrowers. It works directly with franchised dealerships, so the application process starts in the finance and insurance (F&I) office. If you’re trying to decide if Exeter Finance is right for you, here’s what you need to know.
About Exeter Finance
Exeter Finance, based in Irving, Texas, is a 13-year-old company that specializes in offering subprime loans to credit-challenged customers. The company offers new and used car loans through franchised dealers to those with credit scores as low as 575.
Loans are only available through F&I departments located inside car dealerships that have a relationship with Exeter Finance; you can’t apply for a loan directly through Exeter. However, Exeter is available in participating franchised dealerships in every state in the U.S. except Hawaii.
Exeter: At a glance
If you are looking at Exeter Finance, here are some key points to keep in mind so you can better compare it against other options:
- Loan amounts start at $6,000
- Terms vary according to financial information and credit scores, but APRs can be as low as 5% and as high as 29%
- Loans terms can be as long as 72 months (six years)
Exeter can finance both new and used cars, though you must go through a dealership to apply. Exeter does not refinance current car loans.
How to apply for financing
Exeter Finance provides subprime auto loans through the dealerships it works with. If a borrower has a low credit score, they may be able to get a car loan through a subprime lender like Exeter.
Subprime auto lenders require the same type of personal information to qualify an applicant as other mainstream lenders like banks and credit unions. The F&I department at the dealership typically collects the following information:
- Legal name
- Date of birth
- Social Security number
- Current and former address
- Current and previous employers
- Income sources
- Total gross monthly income
- Current debt obligations
To make the process faster, when it’s time to apply for dealer-arranged financing, be sure to bring a government-issued photo ID (like a valid driver’s license or current passport) and recent pay stubs, 1099 forms and bank statements. Here’s a full list of the documents to bring when buying a car.
Additionally, the F&I department will get the applicant’s permission to conduct a hard pull on their credit report. Depending on how many new credit accounts you’ve opened recently and your recent number of credit inquiries, a hard pull on your credit may negatively affect your FICO credit score.
It’s smart to shop around for your best interest rate when you look for an auto loan. You can do so without worrying about the impact of multiple hard pulls to your credit because the FICO credit scoring model groups credit inquiries for auto financing within a 14-day window and counts them as one.
Another option is getting pre-approved for a loan separate from the dealership, which requires the same information and documents. Shopping around for your best possible terms on an auto loan before approaching a dealership may allow you to save money by paying a lower interest rate. You may also get better terms by applying for auto loans through an online marketplace.
Borrowers who choose to get pre-approved before they go car shopping can take their pre-approval documents with them to the dealership and ask the F&I department if it’s possible to get a better deal.
The fine print
Fees associated with taking out a car loan with Exeter Finance are not listed on its website. Like other subprime lenders, Exeter Finance may charge a loan origination fee and late fees, but does not charge a prepayment penalty. Borrowers should carefully review all charges and fees with the finance specialist at the car dealership before agreeing to use Exeter Finance to get a car loan. It’s crucial to understand the interest rate on the loan and make a note of the first payment due date.
As soon as possible after receiving approval, the borrower should create an account in Exeter Finance’s MyAccount online portal. This site offers 24/7 access to the company’s customer service department and also serves as an interface where customers can make their car payment using a checking or savings account, debit card or ATM card. Exeter Finance also offers a recurring payment option, which is an especially good choice for those trying to build good credit by making on-time payments. Paying bills on time is the biggest factor used by FICO to calculate credit scores.
Pros and cons of financing through Exeter
Exeter Finance is one option of hundreds for subprime borrowers. Shopping around outside of the dealership is an important part of making sure you secure your best possible deal on financing. For instance, many banks and credit unions offer credit builder programs or are willing to relax their FICO score standards if the borrower has a longstanding relationship with the business, has a cosigner with a solid credit history or can provide a larger-than-required down payment.
To get your best possible APR on an auto loan with bad credit, compare car loans before making a decision. It may be easier to simply accept the terms offered by a company that has a relationship with the dealership, but even a slightly lower interest rate means borrowers save money over the life of the loan. Car shoppers with credit challenges may have more options than they realize. Even though a subprime borrower is likely to pay between three and five times the prime loan interest rate, there’s a lot of competition among lenders.
Since Exeter Finance only works with dealerships, it’s important for car shoppers to understand that many dealerships make extra money on a car sale by charging a few extra points of interest on financing — for example, Exeter Finance may charge 8% interest, but the dealership could add 2% and offer the buyer an interest rate of 10%. According to consumer advocacy organization Center for Responsible Lending, dealers add an average of 2.47%, and it could be even higher for those with lower credit scores.
Just a few interest points could add up to a large sum of money. For example, a borrower with a $20,000 loan at 10% interest with a 72-month term will pay $6,677.16 in total interest throughout the life of the loan. At 8% interest, they would pay $5,247.98 in total interest over the same time period, saving $1,429.18.
Highlights of Exeter Finance’s auto loans
- Credit-challenged borrowers with FICO scores as low as 575 may be able to get financing.
- It is available through car dealerships in 49 states and Washington, D.C.
- APR can start as low as 5%.
- There is no prepayment penalty for paying off the loan early, which could save money on interest.
- The interest accrual method is simple interest, which means borrowers only pay interest on the principal of the loan.
- For those who can and will make every payment on time, financing a vehicle with this company helps build a good credit history, as they report to all three credit bureaus each month.
- Participating in a free financial counseling program through the Exeter Finance website earns borrowers six free months of credit monitoring.
Lowlights of Exeter Finance’s auto loans
- The information available on the company’s website does not disclose terms, interest rates or fees.
- New and used car loans are not available outside of a dealership.
- Refinancing an existing loan is not an option through Exeter Finance at this time.
- If a borrower extends the term of their loan, they’ll also have to extend their GAP insurance, which could be expensive. GAP insurance does not automatically extend past the original term of the loan.
- While Exeter Finance’s legal department posts thorough replies to customer complaints left on the Better Business Bureau (BBB) website, there are a total of 111 complaints in the past 12 months and 330 over the past three years. With 31 consumer reviews, the company has an average of less than 1.5 stars out of 5.
- The company recently settled lawsuits in Delaware and Massachusetts where they were accused of facilitating unfair loans to subprime borrowers who did not have the ability to repay the debt.
Subprime borrowers who don’t want to get financing on their own through a credit union, bank or online lender may end up using Exeter Finance through the dealership where they buy their car. They may find it convenient to allow the F&I department of the dealership to handle the application process on their behalf. (Note that refinancing is not available through Exeter Finance if that’s what you’re looking for.)
If you have a higher FICO credit score, you should shop around for a better deal to avoid the higher interest rates typically associated with subprime loans like those offered by Exeter Finance. Additionally, if the dealership offers loan terms that stretch the limits of the borrower’s budget, it’s smart to look around for better interest rates and possibly reconsider the purchase.