Bad credit auto dealers sometimes get a bad rap. People believe the myth that traditional lending is your best option, or that all bad credit auto dealers are out to scam customers. Neither is completely false, but sometimes a bad credit auto dealer is your best option, and there are a lot of good ones out there.
Here are some reasons why you may want to consider using a bad credit auto dealer:
It May be the Only Chance You Have to Get Financed
Once you’ve been deemed a high-risk loan candidate, it can be hard to get the basic necessities in life. In today’s world, your credit determines if you get bank accounts, rental housing and a vehicle. It can be a huge issue for those who have a poor/bad credit history.
Cars often play in a big part in our ability to function; to get family from here to there, get to work, get services and groceries and more. That’s where a bad credit auto dealer can make a huge difference. They are often the lenders willing to take a risk on people no one else will say yes to, and they’re willing to look further than numbers, stats and history to make an auto loan happen. In many cases, they become some people’s only chance.
Bad credit auto loans usually come in the form of in-house financing, or loans from specialized lenders. There are dealerships who advertise “bad credit auto loans.” Before you leap into a contract, take the time to check a dealer’s reputation. In general, a dealer who has been in business for a long time is one that is on the up and up. Realize you will most likely pay a higher interest rate than a typical auto loan, but that is because of the risk bad credit auto lenders take. The key is to enter a loan you can afford. You can do this by:
- Looking at the total cost of the vehicle per month; including maintenance, insurance, gas and monthly payments
- Buy a vehicle that falls within your budget—in other words, be realistic
- Buy a used vehicle with solid reviews and affordable mechanical work
If you do need to have a lower interest rate, consider taking a couple months to fix what you can on your credit. Pay off some collections, and/or pay down some debt. If you need extra money, find ways to make it, like selling off excess belongings, getting a second job or working small temporary jobs.
You Will be Able to Work on Your Credit
If you get into a bad credit loan you can afford, it can do wonders for your credit. There is a lot to be said about making payments on time from month to month. It has a great effect on your credit. The other thing that can happen when you start to see that credit score improve is the inspiration to fix the rest of your finances. There is an overall positive feeling that may motivate you. Take the time to use that motivation to create and stick to a budget and start to pay off your debt and collections. The opportunity bad credit auto dealers gives you is priceless, and next time you go for a car loan, you may qualify for something even better.
Great Bad Credit Auto Dealers Will Work with You
Probably the biggest reason to work with a bad credit auto dealer is that you may be able to get the individualized attention you need. You can give them your full financial picture. Bring your income, budget, where you’ve started to improve your habits and any other information that can help a them get you into the right car. In some cases, the auto dealer may help you come up with a good number, and work with you to find a vehicle that fits within that budget. Bad credit auto dealers want to see their customers drive off in a car, and are typically willing to take the extra time to make it happen.
Just because your financial picture looks grim doesn’t mean there aren't lenders willing to help you. The key is to find a reputable lender and work to find a loan that won’t put you in a worse situation. Many bad credit auto dealers are skilled at helping their customers find and buy a car that can benefit them in the long run, both so they have the freedom to get around, and can work toward a brighter credit future.
