Understanding the difference between a bad credit auto loan and a buy here pay here or tote the note car dealer

What we do

If you have bad credit and you're reading this you may not know the difference between a tote the note dealer and a bad credit car loan.

We can see why, because during the past twenty years we've answered this question many times here at Auto Credit Express, where our commitment to bad credit consumers extends to our web site with a bad credit auto loan application. This was something we felt was needed after seeing the looks of frustration and bewilderment that customers with poor credit often experience if a dealer doesn't offer second chance auto loans.

The difference

A tote the note or buy here pay here dealer is where you arrange a car loan and make payments on it right at the dealership. You purchase the vehicle through dealer financing instead of a third party, such as a bank or credit union.

Instead of making monthly payments to a traditional lender, you make weekly or bi-weekly payments at the dealership. Although some tote the note car dealerships will accept payments either by phone or online, most will require that you bring in a check or cash to their location.

What's the difference between buy here pay here car dealerships and traditional dealers? In some cases, very little. In fact, a growing number of traditional new and used car dealers have begun to offer services normally associated with tote the note car dealerships. You might not see "Buy Here Pay Here" printed on their billboards, but phrases such as "We Finance" may tell you that they offer this option.

The biggest difference between a traditional dealership and a buy here pay here dealer occurs in the shopping experience. At a traditional dealership, the discussion about financing occurs once you've picked out your vehicle. Once you've checked out a few models, asked your questions and even test driven one or two, the finance manager will help you explore your payment options.

At tote the note car dealerships, the process is usually reversed. First you'll be asked a series of questions, then a credit report will be run and the salesperson will thoroughly understand your current credit situation before showing you the cars that fit your credit profile.

When to visit one

In house financing car dealerships are designed for shoppers who may have experienced either situational or habitual bad credit. If your credit score is below a 640 FICO or if you've had trouble getting a traditional auto loan, you might consider a buy here pay here dealer once you've explored one other option.

What are the benefits of tote the note car dealerships?

1. Available cars and available credit

The most important benefit of buy and pay here car dealerships is that they give credit-challenged people the opportunity to get much-needed transportation. In many cases, these dealerships aren't just an option — they may be the only choice if you've been turned down by traditional lenders.

2. Trade-in flexibility

Tote the note dealers also tend to be more flexible when it comes to accepting trade-ins on older model cars. That's because these types of dealerships have traditionally gotten long-term use out of cars that many new car dealers will not accept. They are more likely to find a buyer for your car and, as such, more likely to consider it as part of a down payment.

What is the biggest disadvantage of in house financing car dealerships?

1. Very little opportunity to reestablish your car credit and improve your credit scores

One of the best ways to rebuild your car credit history is to make timely payments on an installment loan. But even if you consistently make payments at tote the note car dealerships, most will not report this positive behavior to the credit bureaus. This means that, even over time, your credit score probably won't improve. In addition, a greater percentage of these loans end up in repossession, further locking you in to this type of loan.

This is where we come in.

Give us a shot first

Auto Credit Express specializes in placing customers with bad credit with dealers that can help them. These affiliate dealers are knowledgeable and work with a broad spectrum of lenders to ensure you have your best chance at getting approved for a car loan.

So if you are serious about getting your car credit back on track, you can begin by filling out our bad credit car loan application now.