When it comes to finding an auto dealer willing to work with your bad credit to help you get a good deal on a loan, the going can be a bit rough. With tough economic times behind us and economic uncertainty in the future, it can seem more and more like dealers and lenders everywhere are re-tightening their purse strings, raising interest rates, and denying clients left and right. But for those with less-than-stellar financial histories looking for a good way to get into a new vehicle, a buy here pay here dealer might be just the solution you’ve been looking for – if, that is, you know how to pick a good buy here pay here dealer from a substandard one.
You don’t have to be a financial expert or heavily connected to the financial industry to understand what to look for in a top-tier buy here pay here dealer, or to avoid being taken for a ride by the less than reputable options out there. A basic set of guidelines can help guide any buyer toward the best option available, and away from all that confusing mess that some dealers might try to use to cloud your judgement – and that means you can find the right deal for you without losing out on the benefit that comes from borrowing from a buy here pay here lender.
Here’s a quick rundown on what you should look for in a quality buy here pay here dealer, and what you should expect from a quality lender when shopping for your next used car. Chances are, by following these guidelines you’ll be driving away in a sleek new pre-owned model in no time – and without the pains that can come with overspending or signing bad financing along the way.
The Shop Itself
The easiest way to get a feel for what kind of lender you’re possibly about to work with is the condition of the shop itself, and what the basic layout of the dealership can tell you about the dealers themselves. Is the showroom dirty, or lacking in basic amenities like a comfortable seating area or lounge, internet access, or an easy view of the workshop? These are all pretty standard features of any reputable dealership, and the absence of any or all of these should be a bit of a red flag for any discerning shopper. In the quest for transparency and good customer service, some things come basic – and these are no exception.
Take time to also look around the shop for any kind of certification or registration with an official body. Any shop with a service center should be staffed by licensed mechanics, and it’s always helpful to check for awards for recognition from local business groups to let you know this buy here pay here dealer is looking out for its consumers. Some buy here pay here dealers may even belong to the National Association of Buy Here Pay Here Dealers (NABD), a national group that monitors all member dealers for basic quality. These can mean a better experience for you as a consumer and less time spent worrying that you made a less-than-perfect choice when picking the dealer for you.
If it’s easy to judge a man by the company he keeps, then it’s even easier to judge someone by the products they sell – and at a buy here pay here dealer, that means inventory. Take a look at the lot and make sure there are no warning signs, like badly beaten rust buckets or dinged up beaters waiting to be scooped up for a rock-bottom price. While these can be good options for some buyers, they mostly indicate that the dealer may be “churning” – that is, selling cars to buyers who can’t afford them and then quickly reselling after repossessing. If you can, try to work with a dealer who sells certified pre-owned vehicles, or at least those with clear and clean vehicle history reports – that way, you can be sure the vehicle you think you’re buying is actually the vehicle it claims to be six months down the road.
Down Payments – Way Too Big, or Way Too Small?
It’s easy for a bad credit buyer to be thinking about a down payment, and looking for a quality vehicle with a low down payment can seem like the best course of action. The fact is, it’s best to agree on a reasonable down payment rather than none at all, since the more money you’re willing to put down now means less money spent in interest in the long run. Of course, the opposite can also be true – look out for dealers trying to push too big of a down payment on you, since this can often indicate plans to repossess or resell your vehicle later on the assumption you’ll be missing payments in the future. Try to find a good down payment for you – usually about 20 percent of the total cost of the vehicle, if possible.
Since many buy here pay here dealers don’t deal with new or factory-direct cars, finding a quality warranty from a buy here pay here dealer can be a bit of a challenge – but not impossible. Plenty of dealers work with certified pre-owned vehicles, which usually come with some kind of after-market warranty, and many dealers simply attach an additional after-market warranty before sale. This means you’ll be able to drive off the lot with the confidence that your new vehicle won’t break down as soon as it hits the pavement thanks to a thorough check-up from a mechanic, and that you can negotiate for a refund if anything does go wrong right off the bat. While finding a quality warranty from a buy here pay here dealer can be tricky, it’s not impossible – and always worth looking.
When it comes to figuring out where most of your money goes when you work on paying off your vehicle, it’s not hard to see how much of an influence interest rates have on the total cost to you. Every borrower wants the lowest interest rate possible, but for buy here pay here customers this simply isn’t always possible. Since buy here pay here dealers work with bad credit buyers, there’s a natural push to charge higher interest rates as a form of self-protection from defaults on loans – and for some, these rates can be exorbitantly high. That’s why it’s best to find a dealer willing to negotiate on interest rates, and to keep in mind that the highest interest rate on even a subprime loan should rarely exceed 20 percent at most.
Some dealers look for borrowers willing to pay super low monthly payments over a long time, only for those borrowers to discover that this means a lot more money spent on interest as time goes by. That’s why it’s helpful to find a dealer willing to negotiate for reasonable monthly payments that both meet your month-to-month budget and keep your loan duration nice and short. This way you can handle your auto loan in both the short term and long term without fears of overspending on interest payments.
So if you’re on the hunt for a quality buy here pay here shop, these basic guidelines should help you find a lender that won’t drive you into a corner financially. Keep these basic rules in mind and you’ll be driving off the lot in a quality used car in no time – and you’ll be a little more informed on how to get a great deal to boot.