Usually one of the first questions we get from car buyers with questionable credit is what interest rate they’ll be required to pay on an auto loan. And while that usually can’t be predicted, borrowers rarely ask what type of interest rate it is – something that could be equally as important.
For those unfamiliar with what the phrase “buy here pay here” means, it refers to a car dealer where you can not only purchase a car, but a dealership where you can finance it, right there, as well. In this case financing is arranged with money that is borrowed from the dealer instead of a bank, credit union or finance company.
What it comes down to is that most consumers with poor will reach the conclusion that it’s more affordable to finance a 2 or 3-year-old used car, especially with a high-risk auto loan. Considering the current level of vehicle quality as well as the high depreciation most new cars experience, this decision makes a lot of sense.
Almost immediately those same car buyers are often faced with another decision: should they buy a regular used car or a certified used car?
Car buyers searching for online auto loans should be aware of the latest report from Experian Automotive study that shows finance company loans to consumers with bad credit experienced an increase in 30 and 60-day delinquencies during the first quarter of 2013.
Applicants with bad credit searching for online auto loans that depend on social security or other types of disability benefits for all or most of their income need to understand that this can pose a problem for most subprime auto lenders. It can, in fact, result in a denial of credit.
But other than an auto loan from a high-risk lender in some cases people with blemished credit have another option they can explore in the pursuit of better FICO scores, courtesy of the internet, called peer to peer lending.
Although Ford’s certified used car program fails to cover vehicles from other manufacturers, the announcement late last summer that the company had partnered with Carfax to provide vehicle history reports is a step in the right direction for consumers with questionable credit searching for online auto loans.