Car buyers with damaged credit are often unaware of many of the problems they may be facing in applying for an auto loan
Consumers with poor credit scores often have trouble applying for car loan and locating the right new car dealer that’s willing to work with them.
Here at Auto Credit Express we understand this situation because for the past twenty years we’ve been helping car buyers with bad credit searching for online car loans locate those dealers that can offer them their best chances for car loan approvals.
So why is it that we help them locate a dealer instead of steering them to a high-risk lender?
Subprime auto lenders
We do it this way because the majority of banks and other lending institutions that offer subprime car loans to consumers with credit issues, for the most part, only lend indirectly. Rather than working directly with car buyers, these lenders are only available through the franchised new car dealers that have signed up with them.
The reason for this is that these dealers not only submit credit applications from potential car buyers, they’re also responsible for pre-screening these applicants as well as collecting the documentation most of these lenders require for income and residence verification purposes.
Finding a dealer
While it’s easy enough to find a used car dealer that works with credit-challenged consumers and advertises “car financing for all”, most turn out to be nothing more than BHPH car lots. While these dealerships will finance practically anyone, they don’t report loans or payments to the credit bureaus. This means that while these buyers will have solved their transportation problems their credit reports won’t reflect the fact that they’ve had a car loan and most will find themselves in the same credit situation the next time they need a car.
Another problem is size. Since most of these tote the note dealers are small used car lots not affiliated with a new car franchise, the vehicles on their lots are typically older, high-mileage cars that may be unreliable and are covered (if at all) by a very limited, short-term warranty.
Finally, a comparatively high percentage of these BHPH loans end in repossession.
Sorting through the list of new car dealers
The flip side to this is that quite a few franchised new car dealers don’t want to be saddled with the problems that are sometimes associated with customers who have damaged credit. In all fairness, though, it should be noted that unlike traditional banks, dealing with subprime auto lenders requires special training for dealership employees. To top it all off, dealers who work with these higher risk lenders also have to stock the right types of vehicles. Given these requirements, many dealers simply lack the experience or the patience to maintain a special finance department.
The internet not only has changed the way buyers shop for cars, but also how consumers with limited or less than perfect auto credit (and even low FICO scores) can locate dealers willing to work with them.
As an example, websites such as ours match applicants with a network of dealers that are signed up with a broad range of lenders. These dealers offer a number of advantages over BHPH car lots including:
1. Much larger inventories of eligible vehicles
2. Vehicle inventories consisting of new or newer used vehicles with lower miles (due to strict lender requirements)
3. Most vehicles are eligible for new and used car service contracts that can typically cover all or most of the loan term, helping buyers avoids expensive repair bills
4. These lenders report loans as well as payments to the credit bureaus allowing buyers to establish their car credit and raise their credit scores.
Take the next step
So there you have it. Auto Credit Express matches people with auto credit difficulties to those new car dealers that can offer them their best chances for approved car loans.
So if you’re ready to reestablish your car credit, you can begin now by filling out our online car loan application.
Get your free credit score now! Get a copy of your most recent credit score.
Are you paying too much on auto insurance? Compare rates in your area and save.