If you have ever had any negative marks on your credit score, even a small one such as not paying a few bills on time, you may have a difficult time finding a lender to finance a car loan for you. Lenders have become increasingly stringent with borrowers, and for a good reason. Also, depending on your credit score, you may find that lenders will charge much higher interest rates to borrowers with less than perfect credit. If you have experienced any of these situations, you know first hand how difficult getting a car loan can be. There may be a solution, however.
Enter the buy here pay here car lots. Car dealers know many good people can have less than desirable credit scores but still need a car. They know that things can happen to everyone, and they have a way these people can still buy a car without getting a loan from a traditional lender. Normally, car dealers have established relationships with lenders to help their customers get car loans. The buy here, pay here car lots allow people with bad or no credit to purchase a car without getting a traditional loan. The dealer becomes the lender.
Dealers know that if they are willing to take a calculated risk, they can do business with buyers who have credit problems. Here is how it works: when you purchase a car from a buy here pay here car lot, you will make your payments directly to the car dealer or their appointed designee. You may make payments directly on the premises or another place designated by the dealer. Since the dealer is the lender, they will make their own borrower stipulations. Since each dealer can make their own stipulations, you will need to check with each one for all the details. You should check with the dealer first, so you can bring all the required documentation. Among the things the dealer may require are:
• A down payment
• Advance payments
• Proof of income
• Proof of insurance
• Proof of address
There are advantages with this type of arrangement. Obviously, it makes buying a car possible for many people with credit problems. The details of your arrangement, such as the repayment period, may be negotiable with the dealer. You may not have to deal with a lending agency with which you have no familiarity. Often, payments are made directly to the car dealer, and upon pay-off, you have established a long-term relationship for future needs. This makes it a great opportunity to start rebuilding your credit as long as the dealer reports to the credit bureaus. Check with your dealer. For some people, it may actually be more convenient making a weekly payment versus making one larger lump-sum payment per month. You may find some buy here pay here car lots who accept trade-ins. Some of these dealers offer the convenience of online credit application and approval, as well.
Of course, there are disadvantage to this arrangement that you should consider. Some dealerships may require a weekly or bi-weekly payment. It can be an inconvenience to make a weekly payment, especially if you have to stop in at the car lot every time. You may want to consider a dealer who is close to you for that reason. Keep in mind that you may end up paying a higher interest rate, which translates into more money spent over the life of the loan. Just like a traditional loan, default could end up on your credit report. It is important to understand all the terms of your arrangement and obligations before making a decision.