For most people, getting a car loan is as easy as walking into a dealership, picking a car, and signing the papers. However, the story is a little bit different for those of us who have bad credit and to be quite frank, our options become limited at best. If your credit history isn’t that great, then you have probably thought about trying to achieve financing through a car dealership who claims to finance anyone, but before you do, you need to keep reading so you understand why this can be a terrible idea.
Getting a Car Loan With Bad Credit Can Be Trouble
Most car dealerships such as J.D. Byrider or any other dealership that advertises “bad credit, no problem” will almost always leave you in an undesirable financial situation after you have signed the paperwork. If you have read our previous blog post about low credit score home loans, then you are probably already know where this conversation is heading.
Generally, what happens is you get excited about being able to obtain any type of financing and the salesman probably gives you some song and dance about how hard it was to get you approved and you are no longer thinking about the bottom line or the actual monthly payments themselves. If you find yourself in this type of conversation, try to keep in mind of the actual total amount you have to pay in order for you to physically own the car, we also want you to think about how much your monthly payment is as well and if it makes sense financially for you to go ahead with the purchase.
Car salesmen will also try to play the same cards as the mortgage lenders too, meaning that they will say if you make your payments on time, then it will help increase your overall credit score. However, so will paying off your previous creditors, but we already discussed that in our previous article, so let’s move on.
Buy Here Pay Here Places Prey on People With Bad Credit
Let’s talk about Buy Here Pay Here dealerships for a minute. Although most people at these places seem friendly, we want to politely remind you it is because they are going to make a fast buck off of you and you’ll probably be unhappy with your vehicle after the purchase. Most car dealerships that fall under this category all operate under the same business plan. They usually buy high mileage cars and they sell the car as is. This means once you drive the car off the lot, they are no longer responsible if anything goes wrong with the car. You are probably wondering, well, what if my transmission goes after only a few months of driving the car? Sorry to burst your bubble, but, it’s your responsibility to get that fixed now.
These types of dealerships will also offer monthly payment plans, but they don’t tell you that your monthly payment will equate to what you would pay for a new car. We aren’t kidding either. Getting a car loan from a Buy Here Pay Here dealership is a lose, lose situation and you should really avoid it at all costs.
What to Do if You Really Need a New Car and Have Poor Credit
- Visit multiple dealerships and take note of the interest rates they are offering you on the car loan.
- Ask if there is any wiggle room as far as a down payment is concerned. If there isn’t, then just walk away.
- If you decide on getting a car loan with poor credit, then try to also negotiate smaller monthly payments.
- Also keep in mind that financing a vehicle also means you will have to pay for full coverage insurance on that vehicle until it is completely paid off.
- Tally up your total bills for the month and ask yourself if you can afford the new monthly payment plus gas, insurance, and repairs if the vehicle needs maintenance.
- Do not purchase a vehicle from a Buy Here Pay Here dealership that offers no warranty or doesn’t stand behind the vehicles they are selling.
Getting a car loan with bad credit isn’t always a bad idea, especially if you really need a car, but you should always keep your eyes peeled and be on the lookout for shady dealerships. You should also be aware that you are going to face higher than normal monthly payments and possibly be requested to make a large down payment on the car to obtain financing.