When people shop buy here pay here dealers they can have trouble understanding how it works. It can be confusing to find yourself in a bad credit situation. Sometimes it can be hopeless for you to get out. It really doesn’t have to be.
Buy here pay here financing is a great way to rebuild your credit history if you go to the right place. The key is figuring out which dealerships are respectable and which ones aren’t. There are plenty of fly-by-night buy here pay here dealerships that are only interested in your money. There are also plenty out there who are understanding and willing to work with you on your payments, down payment and your wants and needs.
I’m here to clear up the confusion on buy here pay here dealerships and what to look for when shopping for a car when you have bad credit.
1. Expensive iron: When people go to a buy here pay here dealership they automatically think that they can buy the most expensive car with little money down. Buy here pay here is considered high risk financing because of the high rate of loan default and accidents.
The truth of the matter is that most people who finance a buy here pay here car won’t end up paying it off and instead will just give up on the car loan. Because of this it drives up the cost of the financing and the interest rates. This doesn’t mean you won’t pay the car off it just means that a high percentage who do finance at a buy here pay here don’t.
When you’re in a bad credit situation it’s better to limit your expenses even if it’s not the exact car that you want. Buy here pay here auto loans are short term. Once you pay them off and raise your credit profile you’ll have an opportunity to get the exact car you want for less money.
2. Less money down isn’t always the best: When dealing with bad credit and lots of bills it makes it difficult to come up with a lot of money down. Most people want to put as little money down as possible. This can end up costing you thousands more then if you put more money down up front. If you put less money down you’ll end up paying a lot more on interest and fee’s.
Putting more money down lowers your down payment every month which can save you hundreds and thousands of dollars over the length of the loan. If you don’t have a lot of money down look for a buy here pay here that splits up your down payment and gives you a set number of time to come up with the rest. The best buy here pay here dealers will give you 60-90 days to come up with the rest and will defer your first car payment as well.
3. Defaulting on your loan: When you go to a buy here pay here dealer it’s usually your last and only choice. The loans are short term so you’ll own the car much faster. If you’re shopping buy here pay here you most likely have a previous repossession, bankruptcy, foreclosure, missed medical bills or credit card payments.
Do whatever you can to make sure to pay the car off and not default. Your credit can’t afford to take another mark on it and it will lower your score even more. Remember your goal is to rebuild your credit not ruin it even more.
4. Payments: Buy here pay here payments are historically a little higher because of their high risk nature. Don’t make the mistake of picking a payment that’s too high. Don’t forget that you also have insurance to worry about and pay as well.
If you have to choose a car that isn’t your first choice to get your payments where you want them to be then do it. Remember, the loan is short term and you won’t have this car forever.
4. No credit reporting: Don’t buy at a buy here pay here that doesn’t report your credit history. No all of them report but the best ones do. Remember, one of the reasons you have to finance at a buy here pay here is because of your bad credit situation. Why not kill two birds with one stone and pay off a car while also rebuilding your credit. You’ll save thousands over the long run.
Only go to a buy here pay here that reports your payments and helps you rebuild your credit profile.
5. Flexibility: If you’re in a tough situation it’s best to go somewhere that is willing to work with you. Not everyone with bad credit or no credit is the same. Some need more help than others and everyone has all sorts of different needs.
If you don’t have a lot down find a place that will work with you and give you some time to come up with more money. There are places that will set your payment up so it falls in line with your pay periods so you aren’t late.
6. Listen and drive: When you finally choose a car, SUV or truck then make sure you spend plenty of time with it. Listen to how it sounds. Don’t just drive it for 5 minutes and shut it off and buy it. Sometimes as the engine and transmission warms up you’ll notice small issues you wouldn’t have noticed before. Not all buy here pay here car lots have your best interest in mind. Some of them will sell you a car with problems just to get rid of it.
Find the ones that service their cars before selling them. Most car dealerships are as is no warranty expressed or implied. There are some dealers that will protect you up to a certain point as well. If something goes wrong on the car they will either put you in another vehicle or fix the problem.
Bad credit doesn’t have to be the end of the world. You can rebuild your credit profile by financing at the right buy here pay here dealership. If you need help with financing and are in a bad credit situation we can help you. Call (303) 623-1926.