Those with bad credit often feel a sense of dread at the thought of asking for any kind of financial assistance, but what if there was a place willing to leave your past behind and give you the second chance everyone deserves. These places exist, and they are called bad credit car dealerships, but understanding them may seem a bit complicated at first glance.
While bad credit car dealerships are here to make getting a loan simple and quick, there is a lot to understand about how they work, and why they do what they do. So, instead of explaining everything in excessive detail, we will just give you the long and the short of bad credit car dealerships so that you are prepared when you take hold of the precious second chance at financial freedom.
What is a Bad Credit Car Dealership?
A bad credit car dealership is any dealership willing to grant you loans for your next automotive purchase with little to no obligations other than the assurance that you will pay you back. Some of these dealerships may not even require a credit score or social security number and many will even pre-approve your loan without any hesitation. That being said they are no charity and should be treated with the same scrutiny as any business if you don’t wish to end up being set up to fail. That being said they can also be an option that makes everyone happy as long as you understand what is being asked of you and follow through. Overall though, these bad credit car dealerships are a solid option for anyone who is desperate for a fast and easy way to get a pair of wheels in order to continue living their daily life. However, many drivers looking for bad credit car dealerships find that they can receive the same services in a much more convenient manner from online alternatives for bad credit car dealerships. Essentially, these are bad credit dealerships that operate 100% online.
Why Would They Do This?
Getting a car loan with bad credit can be an extremely difficult challenge, and so a part of the logic behind offering loans to those in this situation is to bring in a market that is being unutilized due to the risk of funding those who have shown bad judgment in the past. Generally, they minimize this risk by offering these loans with higher interest rates. So drivers get the loans they need to get back on the road quickly and easily, and they get a new market to provide for with little to no risk on their behalf. Honestly speaking it’s a win for everyone.
Why Would I Need a Bad Credit Car Dealership or an Online Alternative?
There are a number of reasons why a driver may want to look into getting there car and loans from a bad credit car dealership, but the main reason is, of course, bad credit. In life we all make mistakes, and sometimes we just can’t seem to bounce back quickly enough before we take another hit and it becomes an endless cycle. Those that fall into debt are faced with a very tall wall to climb, but that doesn’t mean they shouldn’t get a second chance.
With the top credit score being 850, a low or bad credit score can range anywhere from 300 to 600. This is mainly caused by not repaying debts on time or at all, but it can be raised by doing the opposite. The problem is that once you have had a bad run of things you often won’t get people begging to lead you money so that you can pay it off to get back to a good score. This is where bad credit car dealerships can help. Not only will bad credit car dealerships, or their online alternatives, give loans to those who are financially beat, but they will also give people with bad credit a much-needed chance to fix it by paying these loans off on time.
So, why would you need a bad credit car dealership? Well because you need a car fast, you need financial help without your past mistakes haunting you, you are ready to be reasonable with your payments, and you need a second chance to get back in the green.
What Will I Need?
You honestly won’t need much when it comes to getting a loan from a bad credit car dealerships or online alternatives, even if you are buying the vehicle directly from them. With that said, here are just a few necessities you will want to have at the ready when you decide to take the leap after doing your research:
- A reasonable down payment that equals about 25% of the vehicle
- Your state issued driver’s license
- Proof of income
- Proof of residence
- Proof of insurance
What Are Some of The Pros and Cons?
There are positives and negatives to nearly everything in life, and bad credit car dealerships are no exception. Sometimes the pros outweigh the cons and sometimes the cons are just too much to handle. So, let’s state the facts so that you can make the best decision for your own situation.
- They will offer you a loan even while having a bad credit score
- The process is quick and easy
- You can have a chance at affording the car you want
- You can use the loans to work on getting a better credit score
- They require high-interest rates
- You risk of getting too high of a loan if you aren’t careful
- Not paying on time can result in major debt
- Some dealers will limit your choices
Helpful Bad Credit Tips
Trying to get a vehicle through a bad credit car dealership or online alternative can feel like a complicated venture, but as long as you got the basics down you should be ok. That being said, it never hurts to hear a few extras tips to make sure you are doing things right.
Do your research
This cannot be stressed enough; research both cars and loans until you can’t think anymore, take a rest, and then do it again until you feel confident you know what you can manage and who can provide the best assistance. The key points are to organize your current finances, find a vehicle the suits your lifestyle needs not your personal wants and look for dealers with the best interest rates and payback timeline.
Don’t let them pull you in with high loan offers
While most bad credit dealers will limit what they will loan you, some will try to get you by offering high limits in hopes you overspend. Just make sure you know your limit before going in and stick to it no matter how nice that car in the center stage looks. Also, be careful with those looking to upsell you on add-ons and other such fees you didn’t plan for in advance.
Pay often and on time
This may seem like common sense but this is how most people got into this situation after all. Since this is a second or even third case for most drivers, these dealerships are not nearly as forgiving when you slack on the payments. Always pay what you agreed to, which shouldn’t be an issue if you stuck to your budget, and If you can save in advance and try to pay a little extra to get out of the loan as fast and clean as possible.