If you have bad credit and can't get financing for a new car because of it, then you may be stuck in an endless cycle of spending too much cash on taxi cabs and other high-cost forms of transportation that leave you with no cash at the end of the month to save for a future car purchase. You may think that since your credit is bad, you cannot get a car loan (and you may have even been turned down for them a few times), but there are financing options to look into before you blow more cash on cabs. Here are two tips to help you avoid wasting more time applying for car loans that are unlikely to be approved for and how to finance a car the easy way.
1. Skip Dealerships That Don't Offer In-house Financing
When you apply for a loan at one of the major auto dealerships, the dealership itself is often not responsible for your loan for very long. While the salesperson may complete all of the loan paperwork for you, the final debt is usually sold to an outside bank or credit union that then takes it over. That means that whether the dealership owner or salesperson thinks you are reliable and will follow through with making your payments on time every month doesn't matter as much as your credit score does, because a good credit score is what the debt purchaser wants to see.
If you have bad credit, then you may now understand why you have been denied car loans even though you are an otherwise financially stable person who holds a steady job. You may keep getting denied based on an unavoidable old hospital bill that is still on your credit history or because you got in over your head several years ago with your very first credit card that resulted in a charge-off now on your credit.
2. Find a Buy Here Pay Here Dealer
Now that you know how financing is provided at traditional car dealerships, you can more easily understand why you are more likely to get approved for an auto loan from a dealer that offers in-house financing, often called a "buy here, pay here" dealer. If you know you have bad credit, then this is the type of auto dealership you will allow you to finance a car.When working with these dealers, there is no outside financing company or bank operating as the middle-man or that will purchase your debt. That means that they can take other factors into consideration when deciding whether to approve your financing or not, and your credit score is not the only deciding factor.
Even better, these dealers often offer loans called "any credit" financing. That means that your credit score and history are not taken into consideration or even looked at when you apply for vehicle financing. That doesn't mean that anyone can walk in the door and leave with a car, but it does mean that as long as you have a steady job and are not directly in the middle of filing for bankruptcy, then you are very likely to be approved for in-house financing.
There are many myths surrounding buy here pay here auto dealerships, so don't let any of them keep you from checking them out. One of the biggest myths is that these dealerships always have sky-high interest rates on the loans they approve, but that is not true at all. Many of these dealers charge as little as 12.9 percent APR, and while interest rates do vary widely among dealers, they are typically very reasonable.
If you have bad credit, then you can stop wasting your time applying for car loans you will likely not be approved for and stop wasting money on taxi-cabs to get to the dealers if you just shop at a buy here pay here dealership. As long as you have a steady job, you are likely to be approved for vehicle financing with a reasonable interest rate at this type of dealership even if you have bad credit.
