Types of Bad Credit Car Loan Dealers
by Steve Cypher on Wednesday, October 14th, 2009There are four ways in which consumers with bad credit can obtain bad credit car loan financing. Deciding which type of dealer to choose and the best way to find these dealers may be surprising.
Who we are
At Auto Credit Express we have been in the subprime car business for nearly 20 years. During that time we’ve helped thousands of customers with bad credit buy a car and raise their FICO scores by matching up our applicants with car dealers that specialize in subprime auto finance.
When we first started out in the business, financing a car with a bad credit auto loan from any place other than a “buy here pay here” lot was nearly impossible. But as more and more national lenders entered the subprime finance arena, the idea of financing a car, even a new one, from an “A” dealer (one that has a new car franchise) with a bad credit car loan began to take hold.
Bad credit
Today, we find that many customers with bad credit assume that a bad credit car loan can only be used to finance an older, high mileage used car. A surprising number of these customers also assume that they will only qualify for a car loan at a “buy here pay here” lot. In many cases, this just isn’t true.
Buy here pay here
Sometimes called “buy and pay here”, “in-house financing” or “tote the note” dealers, these car dealers often provide loans to people with bad credit with no credit check (provided they meet other guidelines). Although these tote the note car lots may finance everyone, there is a down side to getting one of these no credit check auto loans from a we finance everyone car dealer.
One aspect of these dealers that most consumers don’t realize is that Tote the Note car dealers rarely report your loan payment history to the credit reporting agencies. This means if you are trying to rebuild your credit rating, a “no credit check car loan” from a “we finance everyone” bad credit car loans car dealer probably won’t help you raise your credit score.
Mega used car lots
Mega used car lots are as large as many mega-sized new car dealers – many of them national chains – that deal only with used vehicles. The advantage to these lots is that they have tremendous buying power and many of them have special finance departments for consumers with bad credit.
Because of their size, most of these dealers are able to offer bad credit car loans through a few national lenders while many also offer their own “buy here pay here” finance arrangements.
The drawback to these types of lots is that you can only finance a used vehicle (obviously), and due to the fact that many of them aren’t affiliated with a new car franchise, there are a number of national lenders that will not work with these dealers.
Franchised new car dealers
These dealers are known as “A” dealers not only because they sell new cars but because, in the hierarchy of car dealerships, they are at the top of the heap. In the past, most of these dealers shunned customers with bad credit. But over the past few years, the profits of these dealers, especially those from the domestic manufacturers, have been declining (it’s quite common these days for automobile dealers to sell a new car for the invoice price just to move the unit and please the factory).
When auto sales are slow, dealerships look for ways to sell more cars. One of the ways to sell more cars is to get more people with bad credit approved. That being said, many of these dealers jumped into the bad credit auto sales arena without the proper training and, quite frankly, many of them made a mess of it. With bad credit auto sales, the dealer has to do more work than they may be used to. If anything goes wrong in the documentation process, the contract is sent back to the dealer and the dealer holds the contract for the car. This means the dealer must collect the monthly payments from the customer and dealers do not want to do this.
The sensible alternative
As a sensible alternative, may we humbly suggest Auto Credit Express? At Auto Credit Express, we specialize in helping people with bad, blemished, bruised and tarnished credit buy cars and reestablish their credit at the same time. Through our web site, www.autocreditexpress.com, we have helped thousands of customers locate the right dealer and get financed on a new or low-mileage used car. We do this by educating our customers. Our web site contains calculators and resources that will walk you through the application process, answer your questions and help you determine how much car you can afford. Unlike the vast majority of nameless, faceless “blind” bad credit car loan sites, our toll free number is listed on every page in case you have any additional questions.
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