One of the more popular (yet unconventional) means of obtaining auto financing for people that have bad credit seems to be online. While most would expect that buying a car with bad credit would entail going through the hoops and ladders of bank financing or buy here pay here car lots, it seems that it’s getting easier for people with online auto loan providers and services that help those with credit misfortunes. Whether or not this is the most convenient way of making this financial accomplishment seems to depend on the quality of the company that one employs for the “job”.
More and more websites are popping up that offer people that have low credit scores the opportunity to get matched with a lender that will offer them a car loan. Some websites are simply lead generation companies that sell consumer information to third party car dealerships and lenders that are in the secondary loan business. Others (less frequently) are genuine loan companies that simply offer sub-prime lending over the internet.
By applying online, one may be able to have a negotiating edge as car dealers are put in the position of having to pursue the customer and make their lead purchase profitable. In contrast, multiple credit inquiries as a result of visiting multiple dealerships may bring down a consumers FICO score even further.
Here are a few articles that have become very popular online with regard to secondary auto financing…
“Buy a Car with Bad Credit with No Money Down” by Jason Lanier…
You’ve got bad credit and dealer after dealer is wanting money down. To buy a car with bad credit, with no money down, you need to know a few things.
First, there are only two reasons that a dealer would want a down payment…
The most common reason is because it adds profit to the sale. The other less common reason is because it’s needed to lower the total amount financed for approval by the lender. Trying to figure out which is the real motivation to pressuring you for cash is a little difficult so long as, you are depending on the dealer to get you approved.
Most people think that if they have bad credit, they have to use the financing offered through the car dealership. After all, the local bank won’t give you a loan right? This is a common mistake that can cost you thousands of dollars in outrageous finance charges.
Let me fill you in on a little BIG secret…
Car dealerships mark up the price of the car. Everyone knows that. Did you know that they ALSO mark up the interest rate? Yes, they do. They submit your credit application to lenders. The lender responds with an offer. Let’s say that they approve you for a rate of 9%. Guess what? The dealer, knowing that you know you have bad credit will try to convince you that you are approved at 12%. The 3% difference becomes nothing more than profit that the finance manager gets paid a commission on. Guess you pays for it… you. Your payments go up 10, 20, 30, 50 or even $100.00 per month simply because the dealership marked up the interest rate.
The truth is this. You can buy a car with bad credit with no down payment and also with lower interest rates by simply avoiding the dealer finance department altogether. If you know where to look and prearrange your financing (yes it’s done everyday), then you can have the confidence to walk into a dealership, pick out the car of your choice based on the amount the finance company preapproves you for and had the dealer a check. This puts the power of negotiating price in your favor.
Car dealers will be jumping over backwards for your business.
“Warning About Buy Here, Pay Here Car Lots” also by Jason Lanier…
Before you turn over your hard earned cash at a buy here pay here car lot, there are some things that you should know. This information will save you a lot of money, both right now and in the future.
You’re paying too much.
There’s no bank that’s regulating how much the car lot is charging you for the car. In many cases, buying from a buy-here-pay-here car lot is resulting in you paying thousands more for a car than it could ever possibly be sold for at a regular car dealership. On top of that, you’re paying thousands more in finance charges than you have to.
You don’t have to use a buy here pay here car lot!
You absolutely don’t. There are finance companies on the internet that specialize in helping people with horrible credit get into cars without even needing a down payment. You can save thousands of dollars on both the price of a car, your interest rate and your monthly payments if you just know what to do.
Regardless of your credit history… If you’ve had judgments, repossessions, bankruptcy or multiple bankruptcies, medical collections, tax liens, whatever. Who cares?
You can get financed and approved… for more car with lower payments. Lower payments are the result of a lower interest rate.
You know what the best thing about getting approved online is? You don’t necessarily have to buy from a car dealership. Having an approval letter from an online loan company means that you can go car shopping anywhere you want, including shopping for cars in your local newspaper for sale by private owner, which saves you from having to pay sales tax!
Editorial Note: Both of these articles advocate that consumers should educate themselves about how bad credit car loans and financing ploys of dealerships function. Making an educated decision and familiarizing oneself with the options that are available when in credit distress is paramount in making a good decision that will not only provide dependable transportation, but also protect the financial interests of the consumer in question.
Where is the best place to get a car loan when you have bad credit? That choice is up to you. One thing is certain though – do your homework and take your time. You’re sure to come out ahead. By making simple comparisons among lenders and offers for credit quite a bit of hard earned cash can be kept where it needs to be – your wallet.
Creditfrog.com
