If you have found yourself in a situation where you need a different car but your credit isn’t the best, rest assured that you are not alone. The truth is, there are a lot of people throughout the country that have credit issues. Unfortunately, recent economic downturns and the loss of jobs has forced a lot of people into bad credit situations when they never thought they would be in that situation themselves. Furthermore, there are times when good people simply can’t pay back their debt because something unexpected has happened. Sometimes, it is as simple as getting in over your head or biting off more than you can chew, so to speak. At other times, it is the direct result of an added major expense, an illness or injury, or the loss of income through no fault of your own. Either way, the fact that you have bad credit doesn’t mean that you are a bad person, nor does it mean that you are not worthy of being given another chance. Unfortunately, a lot of people treat individuals with bad credit like they are no longer worth dealing with.
Of course, this isn’t true, not in the slightest.
It doesn’t change the fact that you will have to look harder when it comes to finding someone that you can purchase a reliable car from if you have bad credit.
1) You have options. Don’t Get Taken For a Ride
Fortunately, it is possible to find the car that you are looking for and purchase it even if you have a lot of credit issues. It means that you are going to have to work harder as a consumer to make sure that you are dealing with a company that is reputable and that is genuinely concerned about your well-being. The most important thing you need to remember is not to allow yourself to be taken for a ride. This is not intended to be some type of cute pun. There are a lot of so-called car dealers out there that prey on people with bad credit and they are anything but fair. You might think that you don’t have any options available to you because of your credit situation.
This in turn might lead you to take the first offer you get it, even if it is ridiculously unfair. Remember, you always have options available to you. Furthermore, you are purchasing an automobile that you will probably be paying on for the next four to six years. Therefore, you must choose a lender that can provide you with a fair deal. In the best situation, you will also find one that is willing to work with you and help you improve your credit situation over time.
ApproveNow helps you find fair lenders to work with at no charge so you can save yourself from this trouble.
Tips:
1) Don’t allow yourself to be talked into a situation where you are going to be paying an unfair amount every month or dealing with a bunch of malarkey simply because you have bad credit.
2) In other words, insist on finding a reputable dealer that respects you as an individual, as opposed to treating you like you are nothing but a number on a piece of paper.
3) ApproveNow helps you find the right lender to work with.
2) Will Mainstream Car Dealerships Finance Someone With Bad Credit?
The short answer to this question is yes. However, they probably won’t finance you through their regular financing department. That means that you probably won’t get financed through the same department that finances those people who have good or excellent credit. Most car dealerships and even most major automobile manufacturers have a financing department that is designed specifically to handle their customers who have credit issues. If there are a few problems with your credit, you can probably expect to get financed through one of these departments. If you have several significant credit issues, you may not be able to get financing through them either. However, that does not necessarily mean that you cannot get financing for that automobile at all.
In reality, you might be able to go to an outside or third-party lender in order to get the financing.
3) How To Make the Right Choices – Be ready.
The thing that you have to do is be careful about who you do business with so that you are not accepting a deal that is virtually impossible to pay off. Your best bet is to visit a car dealership and be honest with them from the beginning. Know your credit rating ahead of time and know how much you have available as a down payment. If you plan on trading in your old car, that can help you even more. It is important that you have cash for a down payment, even with a trade-in, especially if you have bad credit.
Typically, you should expect to have at least $1,000 available for the down payment in addition to your trade-in. Obviously, if you can double that amount, it helps you even more. This could be the difference between getting financed or being turned away. If you approach the sales floor and openly ask them whether or not you are eligible for financing with your given credit score and the amount of money that you have to put down, you will probably get a lot further in a shorter amount of time than if you try to conceal this information and act as if you have an excellent score. Try not to get too nervous about visiting a car dealership and remember that it is possible to find car dealerships that finance bad credit. People do it everyday.
Tips:
1) Know your credit score ahead of time.
2) Be honest about your situation.
3) Don’t take a deal that isn’t right for you.
4) Other Car Dealers That Work With Bad Credit
Of course, you have undoubtedly seen the commercials of the random car dealers that work with bad credit on television or you have heard them on the radio. There are many reputable car dealers out there that specialize in dealing with people who have bad credit and there is certainly nothing wrong with purchasing an automobile from them. However, there are also some that are not so reputable, taking advantage of individuals who have bad credit.
Tips:
1) Carefully research your options before you buy a car.
2) Don’t purchase a car from anyone that makes you feel uncomfortable.
5) Standing Up for Your Rights
If you purchase a car from the wrong dealer, you might end up paying a ridiculous amount of money in interest fees, far more than necessary. There might also be other fees tacked on, not to mention other issues. Find a lender that understands your situation and is willing to help you. There are plenty of good lenders out there that specialize in helping people with bad credit. Finding them is the key.
Tip:
The right lender can make all the difference so be patient when looking for one.
6) Ways To Deal With Interest Rates
Unfortunately, you will have to pay more in interest rates if your credit score is relatively low. The amount of interest you will pay directly correlates to your credit score, so the lower the score is, the higher the interest rate. This essentially means that you will be paying more money for an automobile than someone with good credit. For example, a person with excellent credit might be able to get a new automobile at a 0% interest rate.
Tip:
The better your credit score, the better interest rate you will get.
7) Interest Rates Explained
If you have credit issues, you might find yourself paying anywhere from 10 – 20% in interest, depending on your score. In severe cases, individuals with extremely low scores may end up paying even more. The same is true if you have had a bankruptcy. This has a major impact on your credit score so you will pay more in interest rates.
You can still find someone to finance you, even at a dealership.
However, you will also pay more for getting their financing. This is something that you simply have to deal with and it makes it more important than ever to shop around in order to get the best interest rate that you possibly can. In addition, it provides you with ample motivation to work on improving your credit score over time so that you can get better interest rates in the future.
Tip:
You can still get financing with bad credit; however, it will cost more when it comes to financing.
8) Know the Pros and Cons and Be Informed.
Now that you know that it is possible to get financing, you know that one of the biggest advantages of dealing with specialty lenders is that they frequently do provide financing for a new automobile even if your credit is bad. Therefore, you should never assume that you won’t qualify because there is a lender out there somewhere that will finance you. You also know the potential pitfalls of dealing with these lenders and you know what to look for.
This allows you to take control of the situation so that you are creating a positive environment that works in your favor as opposed to working in the favor of someone else at your expense. Use this opportunity to increase your credit score. Make your payments on time and do everything you can to ensure that your good payment history is reflected. It might take some time, but this can go a long way toward improving your credit score and getting you in a much better situation in the future.
Tips:
1) People with bad credit get financing every day.
2) Choose your lender wisely.
3) Don’t be afraid to negotiate.
9) Making It Work
If you are driving a car that spends more time in the shop than it does on the road, it is probably time to get financing for a new one. Don’t allow yourself to continue struggling with an automobile that no longer works well for you just because of some number that a credit agency has assigned to you. You always hear credit lenders talking about how you are more than just a number and how they approve people based on the whole person because they see beyond the credit score all the time. You have to believe that as well. You are far more than just your credit score. It doesn’t reflect all of the information there is to know about you and you should remember this when you are dealing with potential lenders.
Tip:
Don’t be ashamed because of your credit score; it doesn’t have to define who you are.
1) You have options. Don’t Get Taken For a Ride10) Summary
Unfortunately, some lenders are going to try to push you around or stick you with a deal that is anything but beneficial. That is why it is so important to know the pros and cons of dealing with these letters, as well as knowing your own credit score and saving up for a potential down payment. All of this has a direct impact on your overall experience. If you are willing to put forth the effort, you can find a decent lender that will give you a reasonable deal on a new car. The best thing you can do is be diligent about doing your research and don’t be afraid to turn the lender away when your gut instincts tell you that you can do better.
The dealers that prey on people with bad credit will try to tell you that the deal they are offering you is the best you will ever be able to do. The truth is, they have no idea what someone else is willing to offer and they are only trying to tell you that to get you to take a deal that is unfair in the first place. You will probably have to deal with a lot of people like that. However, it is worth it to sift through all of the unfavorable lenders in order to find the right one.
Tips to Remember:
1) Never limit yourself because of your credit.
2) Explore all of your options.
3) Do your homework and be cautious about who you choose to do business with.
4) Relax.
5) Create a better situation for yourself than the one you are currently in.
6) You can do this!
Consumers have a lot of questions when it comes to bad credit auto dealers, and this is natural. It is not uncommon for people to be too ashamed or embarrassed to ask these questions themselves, since no one really wants to admit that their credit is so poor that they can’t get financing from a traditional lending institution.
To make sure that you have all of the information you need to make the best decision, we have listed some of the frequently asked questions about bad credit auto dealers and the answers below.
FAQ
Are there bad credit auto dealers near me?
One of the most common questions asked by consumers is if there are car dealerships near them that specialize in bad credit auto loans, and the answer is yes.
These dealerships are often referred to as Buy Here Pay Here or subprime lots and you can find them in almost every U.S. city. These car lots are typically located in the metro area due to the fact that the need for a vehicle is generally greater since residents in these neighborhoods generally do not have public transportation. There is also more room in the suburbs for these dealerships to spread out and grow. This is a good thing since large car lots mean more choices for you.
You can find subprime car dealerships in some downtown areas, but it should be noted due to smaller lots your possible choices will be limited.
What are bad credit auto dealers?
To put it simply “bad credit auto dealers” are car lots that specialize in approving financing that traditional lenders deny. These car dealerships are known for working with customers that have no, little or bad credit. In some cases all you need is proof of employment, insurance and a down payment, but this can and does often vary depending on your credit score.
One important fact to remember about these car dealerships is that while your chances of being approved for an auto loan are significantly higher, it will also cost more. Interest rates at these car lots are higher, and in some cases you might actually be doubling the cost of the automobile.
If you are in need of a dependable vehicle to get to work or simply run errands, a Buy Here Pay Here lot might be your only option until your credit improves.
Who needs bad credit auto dealers?
One important fact to remember is that not everyone in the market for a new or used vehicle needs to go through a Buy Here Pay Here lot if their credit is above the subprime level. This is anything above 680.
Unfortunately after the recent recession a large number of Americans have credit scores below 680, and this makes them a “risk” many banks are not willing to take. If you need a dependable vehicle to get around the city and you have poor or bad credit a subprime lender might be your only option, at least until your FICO score improves.
How do bad credit auto dealers work?
The phrase “Buy Here Pay Here” can be misleading and leave consumers unsure if this is the right choice for them. The term simply came about since customers can make their monthly auto loan at the dealership, instead of mailing it into a traditional lending institution.
Other than this the process of applying for a car loan basically remains the same. Once you have found the perfect vehicle for you it is time to fill out the paperwork. Since the sales team is already aware that your credit is less than perfect, and they work on commission, there will not be any surprises regarding your FICO score and they will do everything possible to ensure your application is approved.
Simply bring in your driver’s license, proof of employment and insurance, and be willing to hand over a down payment. The amount of the down payment will depend on your credit and the cost of the vehicle, and some dealerships will even work with you to ensure that you can afford it. Once the paperwork is filled out and signed, chances are you will know in minutes if the vehicle is yours.
Which bad credit auto dealers are the best?
It is almost impossible to answer this question, though it is a good one. There are simply too many bad credit auto dealers in the U.S. to decide which one is the best. This will also depend on your particular situation, since not everyone goes to a Buy Here Pay Here lot for the same reasons.
There are some things you can look for to make sure the dealership you are going to is honest and not trying to take advantage of your situation. Car lots that charge more than 23 percent for interest rates should be avoided, and some market experts state that it should be closer to 20 percent. Anything higher and chances are the dealership is trying to take advantage of you.
Other things to look for to ensure the dealership is a good one includes its inventory and the overall appearance of the lot. If the majority of the vehicles are used and the parking lot is poorly maintained you might want to consider taking your business to another dealership. Just because your credit is below the subprime rate doesn’t mean that you have to settle. With a little effort you can find a trustworthy Buy Here Pay Here dealership.
Can I get a car at a bad credit auto dealer with no money down?
In most cases the answer to this question will be “no”. Due to your poor FICO score almost any Buy Here Pay Here lot will require a down payment. The amount will vary depending on the cost of the vehicle and your credit score, but you should be prepared to put some money down before you drive off of the lot.
If you are lucky enough to have a vehicle to trade-in this can take the place of the down payment. Once again it will depend on the Kelley Blue Book value of your trade-in and how it compares to the vehicle you are interested in.
This is not to say that there aren’t BHPY lots that are willing to wave the down payment, but this usually comes with extremely high interest rates that can make the car loan difficult to pay off. In some cases you might end up paying more than the vehicle is worth. If you don’t or can’t afford a down payment it is important that you read any loan agreement carefully for hidden fees and penalties before signing it.
Should I buy a used car from a bad credit auto dealer?
This can be a tricky question since it depends on the dealership, and the best answer is to simply be careful before you sign any loan agreement and drive a used car off of the lot.
Used cars are more affordably priced and often cheaper to insure, but the downside is that often you won’t be informed if there are any problems. Unlike major dealerships where used cars and trucks are subjected to a thorough inspection, Buy Here Pay Here lots typically just check to make sure that the vehicle runs.
This can create more financial problems for you if you are still paying off the high interest car loan and the vehicle breaks down. When the cost of repairs are added in it might be worth it to pay a little more for a new car that you know will last for years. If a used car is all that you can afford you might want to consider bringing a mechanic with you to check the vehicle over before you make your final decision.
How can bad credit auto dealers help my credit?
One of the best ways to bring up your credit score is to show that you are financially responsible, and this generally means taking out a loan. If you need a dependable vehicle and can’t get financing from a traditional lending institution a BHPH lot is usually your only option.
Even though you will be charged higher interest rates if you make all of your payments on time it will have a positive effect on your credit score. This way the next time you need to purchase a vehicle you won’t be required to pay the high interest rates that comes with a subprime auto loan.