Before going to a bad credit used car dealership, you need to know a few things about the process. Checking your credit history is not the same as looking at your credit score. When looking for financing, bad credit used car dealerships will look at your income-to-debt ratio, monthly payments, and existing credit. For instance, taking credit for a long period of time will increase your net loan amount, but making a high down payment will lower your overall credit. If you have no previous credit, making a high down payment will reduce overall credit and decrease your monthly payments.
Do not go to a buy here pay here dealer
While you may be tempted to purchase a new car from a buy here pay here dealership, this is often not a good idea. These dealerships churn out the same car several times each year. The buyer can fall behind on payments, even if the car runs fine. In either case, the dealership repossesses the vehicle as soon as it can legally. In the end, the first buyer loses all of the money they have spent, including the down payment. Not only that but the buyer’s credit score is also affected by missed payments.
Most buy here pay here used car dealerships do not follow a return policy. Once you leave the lot, you’ll either have to sell the car or trade it in. If you fail to return the car, the dealership will file a deficiency lawsuit against you, garnishing your wages. If the situation goes to this extreme, you might find yourself facing repossession and a critical hit to your credit score.
Get a pre-approval
Getting a pre-approval for a car loan can be a lifesaver if you have bad credit and have difficulty getting approved at a dealership. It gives you leverage when shopping for a new vehicle because you’ll know exactly how much you can afford. The dealership is not aware of your full credit history and won’t play games. A pre-approval is a guarantee of the loan amount and rate you’ll be approved for, so you’ll have more bargaining power at the dealership.
Having a pre-approval is vital when you’re looking to purchase a used car with bad credit. It will help you avoid waiting in the showroom, negotiate better, and build your credit score. The most important benefit of pre-approval is knowing exactly what you can afford before shopping. Alternatively, you can apply for a bad credit car loan through an online lender.
Get a price quote online
If you have bad credit, you can still get a price quote online from a bad credit used car dealership. However, this method can be time-consuming. Some dealerships require that you take a test drive before they will discuss price. Others may not make an upfront offer, for fear that the customer will go elsewhere. Even though online quotes can’t compare directly to a physical price, they can be helpful for your research. The top websites for price quotes are TrueCar and CarsDirect. These websites show the pre-negotiated prices of used cars, making them ideal for people with bad credit. These deals are typically decent, but you can always negotiate.
Many dealerships have websites where you can get a price quote. This saves you both time and money. The best part is that you can easily request price quotes from three or four dealerships at once. You can even submit them via text, phone, or email. When you request price quotes, make sure to include all relevant information about your car, including any fees or government fees. Then, you can choose whichever dealership to deal with.
Down payment
While you may think it’s hard to come up with a down payment for a used car, it’s not impossible. A down payment for a used car dealership with bad credit is often as low as 10 percent. However, this amount is far less than most people think. If you’re looking to buy a car, but are concerned about your financial situation, a down payment of 10% to 20% is an ideal amount.
There are some special financing programs available to people with bad credit that offer low rates but require a higher down payment. Be sure to ask about the terms of any special financing offer before signing anything.
Remember that vehicles depreciate at a rate of approximately 15% a year. New cars, on the other hand, can lose as much as 25% in their first year. Without a substantial down payment, you could easily find yourself upside down on your loan as soon as you drive it off the lot.
