Purchasing a car is an exciting experience, but figuring out how to finance your new wheels can be stressful. Two of the biggest names in subprime auto lending are Westlake Financial and Credit Acceptance. If your credit score is less than perfect, you may be considering getting a car loan through one of these specialty lenders.
But how do you choose between Westlake Vs. Credit Acceptance? We’ll compare the pros and cons of each company to help you make an informed decision.
A Brief Comparison Table
| Features | Westlake Financial | Credit Acceptance |
| Minimum Credit Score | 525 | 500 |
| Interest Rates | 7.49% – 29.99% | 12.55% – 26.55% |
| Maximum Loan Amount | $45,000 | $50,000 |
| Loan Terms | Up to 72 months | Up to 72 months |
| States Available | 47 + Washington D.C. | 46 |
| Prequalification | Online prequalification available | No prequalification |
| Prepayment Penalty | Yes | No |
| Ancillary Products | Requires many add-ons | Requires some add-ons |
| Collections Reputation | Many complaints of aggressive tactics | Some complaints of aggressive tactics |
| Loan Servicing | Sells off loans | Services its own loans |
Overview Of Westlake Financial
Westlake Financial provides auto loans to consumers with credit scores as low as 525 through its network of over 14,000 auto dealers across the United States. The company has been around since 1973 and is a major player in the subprime auto lending industry.
Some key things to know about Westlake Financial:
- Interest rates from 7.49% to 29.99% based on creditworthiness
- Loans up to $45,000 for new and used vehicles
- Terms up to 72 months
- Minimum credit score of 525
- Available in 47 states and Washington D.C.
Overview Of Credit Acceptance
Credit Acceptance is another large subprime auto lender that was founded in 1972. They work with over 5,000 independent and franchise auto dealers to provide financing options to consumers with poor credit.
Here are some key details on Credit Acceptance:
- Interest rates ranging from 12.55% to 26.55%
- Maximum loan amount of $50,000
- Terms up to 72 months
- Minimum credit score around 500
- Available in 46 states
As you can see, Westlake Financial and Credit Acceptance have many similarities when it comes to subprime auto loans. Now let’s dive deeper into the pros and cons of each lender.
Westlake Financial Pros
Lower Minimum Credit Score: Westlake Financial offers loans to borrowers with credit scores as low as 525. Credit Acceptance usually requires a minimum score around 500. If your score is between 500 and 525, Westlake may approve you when other subprime lenders would turn you down.
Prequalification: Westlake allows you to prequalify for financing on their website by submitting some basic information. This can give you an idea of the loan terms and rates you may qualify for before you even step foot in the dealer. Credit Acceptance does not offer online prequalification.
Flexible Terms: Westlake states that they can structure loan terms to fit your budget and finances. This suggests some flexibility in setting repayment schedules.
Dealer Network: With over 14,000 dealers signed up to offer Westlake financing, you may have an easier time getting approved for one of their loans versus other subprime lenders with smaller networks.
Westlake Financial Cons
Rates and Fees: While Westlake advertises interest rates as low as 7.49%, that is only for the most creditworthy borrowers. Rates for subprime applicants are likely to be much higher, averaging around 20% APR. Westlake also charges origination fees.
Prepayment Penalties: If you pay off your Westlake auto loan early, you will face a prepayment penalty. This can make it costly to refinance or trade in your vehicle before the loan term is up.
Ancillary Products: Like most subprime lenders, Westlake loads up loans with extra ancillary products like service contracts, theft protection, and credit insurance. This drives up the cost.
Collections Reputation: There are many online complaints about aggressive collections tactics by Westlake, including frequent phone calls and repossession threats.
Also watch the video!
Credit Acceptance Pros
Lower Interest Rates: While Credit Acceptance’s rates for subprime borrowers are still high, they tend to be a bit lower than competitors like Westlake. This could save you some money over the life of your loan.
No Prepayment Penalties: Credit Acceptance does not charge prepayment penalties if you pay off your loan early. This provides flexibility if you want to refinance or trade in your vehicle.
Dealer Partners: They partner with both independent dealers and major franchises like AutoNation which gives you many options for finding a dealer that uses Credit Acceptance.
Loan Servicing: Unlike some subprime lenders that sell off loans, Credit Acceptance services and collects their own loans. This means better customer service and fewer issues with loan transfers/sales.
Credit Acceptance Cons
Minimum Loan Amount: Borrowers must finance at least $6,000 to qualify for a Credit Acceptance loan. Westlake does not disclose a minimum loan amount.
Ancillary Products: Like Westlake, Credit Acceptance partners with dealers to load loans with extra products that a borrower may not actually need or want.
Credit Pulls: Credit Acceptance allows its dealer partners to submit your application to up to four lenders. This results in multiple credit inquiries which can negatively impact your score.
Collections Complaints: While not as bad as Westlake, Credit Acceptance does have quite a few customer complaints about aggressive collections tactics after default.
As you weigh the pros and cons, here are some key questions to consider:
- How does my credit score compare to each lender’s minimum requirements?
- What is the estimated interest rate I would qualify for with each company?
- Do I plan to pay off my loan early or trade in the vehicle before maturity?
- How important are ancillary products and extra fees to my loan cost?
- How much competition is there between Westlake and Credit Acceptance dealers in my area?
Getting prequalified by both lenders can help provide estimates for the above criteria. You should also look up online reviews for local dealerships that work with each financing company. This can give you insights into their reputation and sales tactics.
Also Read: Comparison Between Lendio And Fundera.
Alternatives To Westlake Financial And Credit Acceptance
Westlake and Credit Acceptance are two of the major players in subprime auto financing. But they are not your only options if you have poor credit. Here are a few alternatives worth considering:
Local Banks and Credit Unions: Many community banks and credit unions offer subprime auto loans. They may have better rates and be more willing to work with past credit problems compared to large national lenders.
Auto Manufacturers’ Financing: Most major automakers like Ford, GM, and Toyota have captive finance arms that provide subprime loans. They know their vehicles best and may offer good promotional financing deals.
Online Lenders: Companies like Auto Credit Express and MyAutoLoan are online marketplaces that match subprime borrowers with specialized lenders. Much faster than applying at individual dealers.
Peer-to-Peer Lending: Websites like Upstart and Lending Club leverage investor funds to provide personal loans at competitive rates that can be used to purchase a car.
Buy Here Pay Here Dealers: While loan terms are usually quite strict, BHPH lots cater specifically to subprime buyers. May be an option if you get turned down elsewhere.
Frequently Asked Questions (FAQ)
Some top alternatives to Westlake Financial for subprime auto loans include Credit Acceptance, local banks and credit unions, auto manufacturer financing, online lenders like Auto Credit Express, peer-to-peer lending through companies like Upstart and LendingClub, and buy here pay here dealerships.
Westlake Financial primarily uses Experian auto credit reports when evaluating loan applications. However, they may also check Equifax and TransUnion in some cases, so make sure all three credit reports are up-to-date before applying.
Yes, Westlake Financial is frequently subject to lawsuits and legal action. They have been sued in class action cases alleging predatory lending and discrimination against borrowers.
There have also been lawsuits for aggressive debt collection practices and repossession issues. Consumers have cited high interest rates, fees, and pressure to purchase ancillary products as common grievances.
In some cases, Credit Acceptance may be willing to settle accounts for less than the full balance when borrowers run into financial hardship or default. However, they have a reputation for making only modest settlements offers in return for a lump-sum payment.
To potentially improve chances of a settlement, be prepared to pay a portion of what you owe in the form of a lump-sum. Retaining legal counsel can also help negotiate a settlement with Credit Acceptance.
Also Read: Choose Between Ally Bank And Bank Of America.
The Verdict
- Both lenders specialize in subprime auto loans for borrowers with credit scores around 500-600.
- Interest rates from Westlake and Credit Acceptance will likely be in the 15-25% range for most subprime applicants.
- Compare minimum credit scores required and prequalification options.
- Check if prepayment penalties apply if you plan to pay off loan early.
- Research dealers in your area that partner with each lender.
- Also look into alternatives like local banks, credit unions, and online lenders.
Whichever subprime lender you choose, make sure to negotiate the interest rate and avoid overpaying for unnecessary extra products bundled into the loan. Be wary of very long payment terms which increase total interest costs.
Down the road, you can potentially refinance your subprime car loan once you have improved your credit score.
