Introduction: Bad Credit Car Dealerships and How to Buy a Car with Bad Credit
Owning a car is almost a necessity in today’s world. Unless you live in a city with a decent public transportation system, chances are that you will need a car for everything from getting to work to picking up your groceries.
For people who have encountered financial difficulties and suffer from a bad credit score, learning how to get a car loan with credit is essential. As banks are increasingly rigid with their loan requirements, finding places where to buy a car with bad credit can be a challenge.
Bad credit or no credit car dealerships specialize in selling new and used cars to people unable to get a loan from a bank or from other car sellers.
For many people, bad credit auto dealers are often the only option to be able to get into a car. Unfortunately, some bad credit car dealers and bad credit car lots have gained a notorious reputation for charging exorbitant interest rates when they sell cars for people with bad credit.
In this brief article, AdvisoryHQ will look at how you can learn how to get a car with bad credit while not getting ripped off in the process. We will begin by explaining what bad credit car dealerships are and how they differ from traditional car sellers. We will then go on to examine who should approach bad credit car lots and in what situations bad credit auto dealers might be the best (or only) choice.
We will then go on to list certain characteristics of car dealerships for bad credit that you should be aware of before explaining how to get a car with bad credit from bad credit or no credit car dealerships. We will end by reviewing a few of the top-rated car dealerships that work with bad credit that can be found online.
What Are Bad Credit Car Dealers?
There exists a sort of myth that if you have bad credit, there is absolutely no way to finance the purchase of a new car. Unless your credit score is absolute rock bottom, chances are that many dealerships will be willing to take a risk on you. When searching for how to buy a car with bad credit, be aware that there are generally two different types of bad credit car dealers.
Image Source: Credit Car Dealerships
The first type is the “buy here, pay here” bad credit car dealerships. They mostly sell used cars for people with bad credit and will finance the purchase themselves. While not all of these bad credit auto dealers are out to scam you, most of them will not report to the major credit bureaus. This means that when you buy a car from these bad credit or no credit car dealerships, your credit score won’t improve, even if you dutifully make your monthly payments on time.
Furthermore, since these types of car dealerships for bad credit mostly sell used cars, you always run the risk of purchasing a car that may need expensive repairs in the near future. Finding new car dealerships that work with bad credit is another option that you might want to consider.
While Mercedes Benz or Lexus dealership might not be open to working with customers with bad credit, there are a number of other bad credit car dealerships that will help you find how to get a car loan with bad credit.
Purchasing a new car is no longer a luxury that only wealthy people can afford. Many bad credit auto dealers who sell new cars understand that if a client can prove a decent monthly income, he or she should be able to afford a low-priced new car.
Some new car loans may start at only $350 per month, and many bad credit auto dealers may understand that even with a negative credit past, most people should be able to afford those low monthly payments.
Why Approach Bad Credit Auto Dealers?
If one car salesman tells you that you can’t apply for a loan because of your “bad” credit score, it pays to shop around. The concept of “bad” credit is debatable, and while one dealership may consider your 600 credit score to be bad, other bad credit car dealerships may consider your borderline score to be decent enough for a loan.
When shopping for bad credit or no credit car dealerships, be on the lookout for advertisements on TV or radio that mention “no credit, no problem” or “your job is your credit.” Since the car market is so competitive, many bad credit or no credit car dealerships may very well offer you a loan as a way to try and bring in new customers and establish long-term relationships.
If one certain bad credit auto dealer offered you a decent loan despite your bad credit, you would most likely return to that dealership even if your credit score improved over time.
These bad credit car dealerships know that many potential customers are desperately searching for where to buy a car with bad credit. Furthermore, since almost every type of car loan can be structured into low monthly payments, bad credit auto dealers know that even if their customers have had credit difficulties in the past, they should be able to keep up with their car payments as long as they have a decent source of monthly income.
Who Can Benefit from Bad Credit Car Lots?
When searching for where to buy a car with bad credit, bad credit car dealerships may be the best choice for people who are on the limit of bad credit and decent credit. Bankrate.com reminds that “because car loans involve less money over a shorter period of time —and an auto is easier to repossess than a home—the same credit score that might have put you in a subprime mortgage loan could bring you a prime or near-prime auto loan.
If you actually have good credit and apply for a subprime loan, it’s likely that you will get less favorable terms than you deserve.”
The best bad credit or no credit car dealerships might have very different standards regarding what constitutes bad credit. While a bank that specializes in mortgages may turn you away for a car loan because of your supposedly low credit score, the best bad credit auto dealers might very well be able to set you up with a better deal. When it comes to how to get a car with bad credit, it’s best not to simply assume that you have a bad credit score.
What to Be Aware of When You Approach Car Dealerships for Bad Credit
It can be mildly terrifying trying to find bad credit or no credit car dealerships that will give you a fair loan. For sure, many bad credit car dealerships make their living by extracting huge profits from extremely high interest rates. If your credit score is low, you obviously won’t benefit from the best 4–5% interest rate on your loan. However, there is a huge difference between paying 12% interest and 29% interest on a loan offered by bad credit auto dealers.
When researching how to buy a car with bad credit, make sure that you do your homework first. Instead of simply blindly trusting the bad credit car dealership that offers you a loan, make sure that you check your credit score on your own.
Edmunds.com recommends that “you need to start with your credit report to see how it would look to a lender. Run it at least three months before you plan on buying so you can take action on any outstanding items.” By knowing your credit score, you will be empowered to better negotiate a fair rate with the different bad credit and no credit car dealerships that you approach.
Experian.com is one website you can go to get your credit score. For $40, they will give you your FICO credit score as well as a complimentary 35-minute consultation session by phone with a credit educator. This will help you understand where your credit score stands to help you in the negotiations with different bad credit auto dealers.
Lastly, when searching for how to get a car loan with bad credit, it is important to understand that many dealerships don’t want to be considered bad credit or no credit car dealerships. The image of “bad credit car dealerships” may make many customers think of shady deals and high interest rates. Thus, many of the best car dealerships that work with bad credit won’t necessarily advertise themselves as “bad credit auto dealers.”
How to Get a Car with Bad Credit from Bad Credit or No Credit Car Dealerships
Once you have checked your credit score and found a reputable bad credit or no credit car dealership willing to give you a loan, it is important to make sure that you fully understand the different terms of the car loan that the bad credit auto dealer offers you.
Image Source: BigStock
One typical “trick” that many of the less-than-honest bad credit car dealerships employ is called the yo-yo scam. With the yo-yo scam, bad credit car dealerships offer enticing interest rates or low monthly payments.
However, these terms are not final, but rather contingent on certain hard-to-meet criteria. Since the terms on the loan aren’t final, many customers who deal with these bad credit car dealerships often receive unexpected notices that their interest rate has been raised by several percentage points.
When doing business with bad credit or no credit car dealerships, it is important to ensure that the terms of the loan that you sign your name to are final and unchangeable.
Best Car Dealerships That Work with Bad Credit
You may be able to find quality bad credit or no credit car dealerships simply by driving around town and reading the billboards. However, there are also a number of online bad credit auto dealers that can help you find the best deal.
Drivetime.com is one quality online bad credit car dealer that can help you find how to get a car loan with bad credit.
They have more than 10,000 cars to choose from nationwide and can help you find a participating bad credit car dealership in your location. Furthermore, with this website, you will also benefit from getting a free credit score. Drivetime has helped people with bad credit to finance almost 900,000 cars since 2002, making it a great option to help you find where to buy a car with bad credit.
Roadloans.com is another website that can help finance cars for people with bad credit. This quality website can help connect you with a number of bad credit or no credit car dealerships in your region. Furthermore, you can choose to search for loans for new cars, used cars, and even to refinance a loan on a current car you own.
When searching for how to buy a car with bad credit, Roadloans.com will give you a number of options that will best fit your current financial situation.
Auto Trader also has a quality website that will connect you with buy here, pay here bad credit auto dealers in your region. This website will allow you to search for cars offered by bad credit or no credit car dealerships based on different down payment and monthly payment options.
Conclusion—Cars for People with Bad Credit
While bad credit car dealerships have certainly gained a reputation for being synonymous with loan sharks, by doing your homework and researching the best bad credit auto dealers, you certainly can find bad credit or no credit car dealerships that will offer you a fair and just loan for a used or new car.
By following the tips above and researching the top bad credit auto dealers online, you can get yourself into a quality car despite having a less-than-optimum credit score.
AdvisoryHQ (AHQ) Disclaimer: Reasonable efforts have been made by AdvisoryHQ to present accurate information, however all info is presented without warranty. Review AdvisoryHQ’s Terms for details. Also review each firm’s site for the most updated data, rates and info. Note: Firms and products, including the one(s) reviewed above, may be AdvisoryHQ's affiliates. Click to view AdvisoryHQ's advertiser disclosures.
AdvisoryHQ (AHQ) Disclaimer:
Reasonable efforts have been made by AdvisoryHQ to present accurate information, however all info is presented without warranty. Review AdvisoryHQ’s Terms for details. Also review each firm’s site for the most updated data, rates and info.
Note: Firms and products, including the one(s) reviewed above, may be AdvisoryHQ's affiliates. Click to view AdvisoryHQ's advertiser disclosures.