Consumer Car Buying Advice Blog

A recent blog article appeared that suggested that all bad credit car loan buyers could finance a car with a bad credit car loan with no money down. Nothing could be further from the truth.

Telling it like it is

At Auto Credit Express, we have been helping customers with bad credit reestablish their car credit with bad credit car loans for more than 17 years. We have done it in the past by running subprime departments in dealerships located in Michigan and Indiana. We currently do it by matching customers with local dealers that specialize in bad credit car financing and by helping customers at two dealerships that we own in Michigan. So as you can see, we know about bad credit car loans.

What is truly frustrating is seeing blog articles written about bad credit car loans where the authors clearly have no idea how bad credit lending really works. Here are some excerpts from a recent article as well as a dose of reality:

Down Payment

Fiction

Here is a direct quote from the article: “First, there are only two reasons that a dealer would want a down payment…

The most common reason is because it adds profit to the sale. The other less common reason is because it’s needed to lower the total amount financed for approval by the lender.  Trying to figure out which is the real motivation to pressuring you for cash is a little difficult so long as, you are depending on the dealer to get you approved.”

Fact

Lenders have strict requirements concerning vehicle pricing. In most cases, lenders will only allow dealers to sell a car for 120% of NADA or Kelley Blue Book (depending on where you live) trade value plus taxes and fees. As a car buyer, you should know that these values are published on the internet and you should base your purchase on them.

Secondly, the lender is asking for a down payment in order for the buyer to have some cash equity in the car. There is a higher risk for default on bad credit car loans and, not surprisingly, it has been proven that buyers that have made substantial down payments are less likely to allow their vehicles to be repossessed than those buyers who have put little or no cash down.

Indirect Lending

Fiction

Here is another quote from the article: “Most people think that if they have bad credit, they have to use the financing offered through the car dealership. After all, the local bank won’t give you a loan right? This is a common mistake that can cost you thousands of dollars in outrageous finance charges.”

Fact

Even if you have bad credit, you should probably check with your bank or credit union first to see if they’ll finance you. Unfortunately, if your credit is truly bad and/or you don’t have a good history with these lenders, your only choice is going to be a bad credit car lender. These subprime lenders only do indirect lending through car dealers – you can’t go online or walk into a branch office and apply for a loan with them.

The Bottom Line

Bad credit car loan customers need to know how the process works in order to make sound financial decisions about reestablishing their credit. The loan process has to be looked at as a series of steps with each one taking you a step closer to better credit.

For more information on the bad credit car loan process, consult our web site at www.autocreditexpress.com. If you have any other questions, feel free to contact us by email or our toll free number listed at the bottom of every web page. By following these steps, you’ll be “on the road” to better credit!

Tags: bad credit, bad credit car loans, car loans, nada, no money down, subprime

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