If you live in the United States or Canada and you’re thinking of buying a new or used car with a bad car credit financing loan, there are a couple of things you should do before you go shopping for your next vehicle.
How do you choose a dealer for a bad car credit financing loan? Is there any reason why you shouldn’t just jump in your current car and drive down to the local auto mall to shop for a car instead of visiting one of the legitimate online car loan web sites? This really depends on your credit history and your FICO score.
If you have a credit score over 640 and a fairly extensive credit history (including automobile credit), you should be able to purchase a vehicle with a traditional prime or near-prime auto loan. But even if this is the case, you should still do some research on the internet. As an example, Consumer Reports has an excellent web site that enables you to view the repair histories of most cars, so that you can see how the vehicle you’re interested in compares with the other cars or trucks in its class. If you search Google Maps for car dealers in your city, such as “(your city) car dealers”, you’ll not only get dealer locations, you can read dealer reviews as well.
If you have less than perfect credit, however, you may want to hold off driving around town. Here’s why: the bad car credit financing loan buying process is much different. And just as the bad credit buying process is different, so is the dealer that can help you with a bad credit car loan.
The fact is, many dealers choose not to deal with subprime lenders. Subprime loans require more effort than regular loans in the sense that dealers are responsible for more documentation and for making sure that the documentation is correct as well as verifiable. If anything goes wrong in the documentation process, the contract is sent back to the dealer and the dealer holds the contract for the car. This means the dealer must collect the monthly payments from the customer and dealers do not want to do this.
As a bad credit car buyer, it’s important to realize that just because a dealer happens to sell cars near in your neighborhood or city does not mean that dealer has the right kind of cars. A dealer’s new and used car inventory also has to be adjusted for subprime lending. Cars in inventory have to meet lender guidelines in terms of mileage and year. The used cars also need to be purchased at or below NADA or Kelley wholesale, since subprime lenders base their “advance” (how much they will finance) on these figures. New cars also have to be within a certain price range, since bad credit lenders are very strict about keeping your car payment within a budget range. Without the correct inventory, the dealer can’t sell any of the cars on the lot to subprime customers.
In addition to documentation and inventory issues, there is the large number of subprime lenders as well as the complexity involved with understanding the varying programs that they offer. Most subprime lenders have at least five “tiered” programs and each program can have its own set of requirements. Without a knowledgeable special finance department, keeping track of the lenders and programs is impossible.
There is a good reason to visit a bad car credit financing loan web site. The best of these sites have helped literally thousands of people with bad, blemished, bruised and tarnished credit buy cars and reestablish their credit at the same time. Their national network of affiliate dealers specializes in bad credit car loans and they can help you reestablish your credit while driving a new or low-mileage pre-owned car and get you back “on the road” to better credit and a higher FICO score.
Tags: bad credit car loans, Car Credit