Bad Credit Auto Loans Vs. Guaranteed Auto Financing

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If you're reading this, there's a good chance that you have bad credit and you need a car. If that's the case, then you've come to the right place. We've helped thousands of bad credit auto loan applicants just like you reestablish their credit while driving a reliable automobile. The process is an easy one, thanks to the internet, and you can start by simply filling out our non intrusive online auto loan application. Unlike guaranteed auto financing dealers, our bad credit car dealer network offers second chance auto loans that originate with lenders that report your payment history to the credit bureaus - allowing you to reestablish your credit scores.

You should also know the difference between special finance car loans and guaranteed auto financing. Although both loans are made in the sub prime market, there are marked differences between the two.

Guaranteed Auto Financing Car Dealers

Guaranteed auto financing is a loan that you take out at a guaranteed auto financing car lot. It consists of a down payment plus a fixed number of loan payments. The loan payments are due every week and are usually made in person at the lot you finance the car from. You are financing the car from the company that owns it and if you fall behind on your monthly payments, it is the dealer that you will talk to regarding other payment arrangements.

In addition, if you are unable to continue making payments, it is the dealer that will repossess the car. The guaranteed auto financing company also has the option of whether or not to report your car payment history to the credit bureaus. The dealers that offer these services generally finance only used cars. Very rarely do they finance new cars and for, the most part, these guaranteed auto financing companies are in no way affiliated with a franchised new car dealer.

Advantages: The cars are usually less expensive. Many people prefer to make payments on a weekly basis. Car payments are made face to face so you know your agent personally and they know you personally. Many of the dealers offering guaranteed auto financing don't bother with a credit check before selling you a car.

Disadvantages: Most guaranteed auto financing companies do not report your payments to the credit bureaus. The cars offered for sale are usually older and have high mileage and, as a result, some of these cars are not that reliable. For most people, it is not convenient to visit the dealer every week to make a payment. Rental terms usually range from 12 to 24 months, limiting the amount of the retail finance agreement to lower-priced older cars.

Bad Credit Auto Loans from Franchise Dealers

Bad credit auto loans, sometimes called second chance car loans or credit repair car loans, are usually available only thru a franchised new car dealer. The car that you are financing can be either a new car or a newer used car. Although the dealer sells you the car, the finance contract is sold to a lender. There is normally a down payment plus a fixed number of loan payments. The loan payments are made to the lender once a month, either by mail or by electronic debit from your bank account.

Since a lender holds the finance contract to your car, any issues of payment or non-payment are made with them. Most of these lenders will also report your payment history to the credit bureaus.

Advantages: Reporting your payment history to the credit bureaus is important if you are trying to reestablish your auto credit and eventually re-enter the prime loan market. The selection of vehicles from a new car dealer is greater. The vehicles are, generally, either new with no miles or newer used vehicles with lower miles. Loan terms start at 24 months and can extend to as many as 60 months, giving you a wider choice of vehicles to choose from.

Disadvantages: Not all franchise car dealers offer this service and the level of experience and expertise in dealer special finance departments can vary widely. The selling price of the cars is usually higher, due to newer vehicles and lower mileage. Interest rates are still high, due to the nature of the loans. Any problems with repayment will be reflected in your credit report and your FICO score.
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