The buy here pay here option can be a little frightening to hear because of the interest rates, limited warranty, and other issues that you hear from people who have experienced it first-hand. However, this shouldn’t be the case because there are dealerships that accommodate people with bad credit history without compromising the quality of service. So if you are in an urgent need of a vehicle but declined by most banks and credit unions in your area, your last resort is the buy here pay here car lots. There are tips to follow that could make your car buying experience easier and less stressful.
Know the Vehicle’s Origin
It is important to know where the car came from prior to buying it. This is different from buying something brand-new, because in buy here pay here, you are mostly dealing with a used vehicle and car buyers with bad credit history are the ones paying it. So to get your money’s worth and avoid wasting time in processing an auto loan, it is important to know if the car you need to have has encountered some mechanical troubles or encountered some accidents. If the car dealership won’t let you see a report of the car’s history, then look for another company that will allow you to know about its mechanical side.
Have It Independently Checked
There are buy here pay here dealerships that won’t let you test drive your chosen car so you could assess if it is in good condition. If this is the case, don’t buy the unit because they might be hiding something. Just go to other used car lots to find what you are looking for. When you are allowed to see the car’s engine and performance, if possible, bring a mechanic to assess it if the car is in good shape.
Short-Term Financing Is Advisable
Having a poor credit rating because of your unpaid credit card balances could greatly affect your auto loan application. But in car buy here pay here, this dealership is best when you opt for short-term auto financing. This is different from paying a smaller amount with higher payment frequency but this is choosing the twice-a-week payment for the entire thirty-two months than the sixty-four months. This allows you to pay lower interest rates, and you could save some money in the long run.
Put Up a Bigger Money Down
If you don’t want to pay big amount of monthly fees, reduce your payments by putting up a bigger cash down payment. For car financing, the more you pay upfront, the more you lessen the loan term. Usually for buy here pay here dealers, they ask for twenty percent down payment. Being asked for more down payment is a good thing but ensure to negotiate for short-term financing.
Buy Your Need, Not Your Want
It is always advisable to buy what you need and not something that you just want from a buy here pay here car dealer. So if you can find a deal that is lower than the budget you set, then purchase that one. Don’t buy something just because of its add-ons. So when it is something that you need, take a small amount of savings to pay for the down payment on a less expensive or cheaper vehicle.
Get a Co-Signer
In every loan that involves a big amount of money, there’s always a co-signer needed for you to be approved of a bad credit car loan. Every credit organization needs a co-signer for auto loans so they will know who to contact and will be responsible to pay once you default from your existing loan.
Talk to a Finance Expert
If you have a credit report with you, consult with a finance expert so you will be guided in your application of buy here pay here car lots dealership and what car make and model that suits your budget.
Qualifying for an Auto Loan
Anyone has a unique financial situation, so there are general requirements that could at least help people with low credit scores secure an auto loan, and these basic qualifications might give you a chance to be approved of financing.
- Specific monthly income – Inquire from your chosen dealership how much monthly income they require you to have to qualify for a car loan.
- Full-time job – Having a permanent, full-time job and not the seasonal, freelance, project-only basis one could give you a chance to be approved.
- Legal residency – You need to be a legal resident for a specific number of months or years in your area so you can qualify for a loan. A proof of residency and working phone number are needed too.