Shopping for a Car with Bad Credit
Its safe to say that when buying a vehicle, a majority of people need financing to buy a reliable car. If you have no credit, bad credit, or limited credit history, then many consider turning to a bad credit car dealership. Bad credit car lots are used to establish or rebuild your credit. Another term for a bad credit car dealership is “Buy Here Pay Here”. This term was given to these types of dealerships because they offer financing in-house, allowing customers to purchase a car and pay for their car all at the same lot.
Before you start the process, it’s helpful to know your credit score. You can keep track of your score, for free, by using CreditKarma.com.
Buy Here Pay Here Dealership Services
Buy Here Pay Here dealers, and bad credit car dealerships have websites that list cars, offer online loan applications, and process car payments.
- Many buyers use online credit services to determine the loan amount and terms for which they qualify before they shop for a car. At some bad credit car lots, you can get pre-qualified over the phone.
- Once approved, you can begin looking over available cars.
- Many bad credit car lots and bad credit used car dealers will accept installment payments through their websites. This is a good way to make sure your payment is processed on time.
- Buy Here Pay Here dealerships also offer affordable in-house insurance. This helps keep the customer’s vehicle coverage up to date.
What do I need to get approved at a Bad Credit Car Dealership?
A bad credit used car dealership may look at:
- Credit History
- How long a potential buyer has been employed
- How long the potential buyer has lived at their current address
- How much down payment the potential buyer is working with
Depending on results, a potential buyer should consider the effects of getting an auto loan with bad credit or no credit:
- Paying a higher interest rate
- Providing a larger down payment
- Getting someone with stronger credit, such as a parent or spouse, to cosign the loan
Do you need to Get Approved for an Auto Loan with No Credit?
10 Questions to Ask Before Financing a Used Car
Financing at a bad credit car dealership can be scary, intimidating, or complicated. It’s important to choose the right dealership and understand which dealership gives you the best benefits if you’re paying a higher interest rate.
- What type of cars am I qualified for at a bad credit used car dealer?
- How high is my interest rate?
- Are there any potential penalties to my loan?
- Is there a warranty with the vehicle or am I buying it AS-IS?
- How many payments will I be making, and what is the exact amount of each one?
- Is there credit insurance, and do I need it?
- If I need credit insurance, do you offer it? If not, can you recommend one?
- Can I get a used car with a low down payment?
- Who is the actual lender and am I guaranteed the rate I’m being quoted?
- What is the actual price I’m paying for the car? Does that include interest paid?
These are important factors that can help you get the best deal. If any of the answers that they say seem vague or confusing, take some time to think about it or ask to speak to a manager to get some confirmation. It’s always best to compare your financing options at more than one bad credit car dealership.
Bad Credit Financing Options at Used Car Dealerships
Many car dealerships that offer in-house financing to borrowers with bad credit or no credit are called bad credit car dealerships or Buy Here Pay Here car lots. Bad credit car lots often have many more financing options than other lenders, making them attractive for people shopping for bad credit auto financing.
Bad credit car dealers have some similarities to other lenders. In a negotiation with a bad credit car dealership, for example, you’ll be talking about loan terms such as the length of the loan, the amount of your down payment, and the interest rate. Putting up a large down payment can help you in bargaining for a lower rate or a longer loan length, because this means the bad credit car dealer takes less of a risk in lending to you.
If you’d like more information about financing a car with a low down payment, or to learn about any of our auto dealer services, speak to one of our finance specialists at the Auto Cave today