Guaranteed auto loans do exist. These types of car loans, however, may not have the most desirable rates or terms. In fact, guaranteed auto loans are most often found at buy here pay here dealerships that don’t check your credit. This may sound great if you have bad credit or no credit, but there are some drawbacks you have to be aware of before you jump into this kind of loan.
Buy Here Pay Here Dealerships and Guaranteed Auto Loans
Buy here pay here (BHPH) dealers, also known as in-house financing or tote the note dealerships, can be a good option for some bad credit car buyers, but they’re not for everyone.
These places are able to offer what can be considered guaranteed auto loans because they don't turn applicants down due to credit. In fact, the majority of BHPH dealers don't even look at credit scores or credit reports. Instead, they use your income and down payment to determine whether or not to approve you.
While the ease of getting approved makes it an option for many types of buyers, there are some drawbacks you need to consider. You're required to make a down payment, and the amount needed depends on the price of the vehicle you choose. Also, selection is limited to used cars, as these places don't carry new vehicles. Take your time when you check out these lots, as you can find everything from late model used cars to older vehicles with higher miles.
If you need a long-term solution that can help you improve your credit score, you may be better off with a bad credit auto loan from a subprime lender.
5 Tips for Getting a Bad Credit Car Loan
For your best chance at getting approved for a bad credit car loan, keep these five tips in mind:
- You credit is important – You should always know where your credit stands before you apply for any type of financing. If you know what’s on your credit reports and you know your credit score, you can be prepared when taking out an auto loan.
- Vehicle choice matters – It’s possible to finance both new and used cars, even with bad credit, but you need to make sure you’re looking for the type of vehicle that best meets your needs. A new car might be more than you can afford at the moment, and there may be some great used options that still meet your needs. It’s important to research vehicle’s thoroughly before you start shopping for an auto loan.
- Be prepared for the process – When you’re applying for a bad credit car loan, you have to be prepared to show the lender that you’re the right choice for an approval. This means meeting certain qualifications including income, employment and residence stability, proof of a working phone, a list of personal references, and a down payment.
- Don’t go it alone – If you think that your credit is going to cause a problem with your auto loan approval, you might consider adding a cosigner or co-borrower to your loan. These are two options that can give you a credit boost while increasing your chances of getting approved. Cosigners allow you to use their good credit score to get approved. Co-borrowers, on the other hand, may give you a credit boost, while you can combine incomes if they are your spouse to qualify for the loan together.
- Apply with the right lender – Applying with the right lender can make all the difference when you’re looking for a bad credit car loan. Not all lenders work with people who are struggling with poor credit, while those that can typically work through special finance dealerships, and may not be easy to find if you don’t know where to look. Fortunately, you have Auto Credit Express on your side.
Find the Auto Loan You Need
While everyone wants a guarantee about everything, you might want to think twice about a guaranteed approval auto loan – just because you can get approved doesn’t mean the loan is a good deal. Sometimes, lenders that guarantee approval before they know your individual situation may only be able to get you approved with the highest possible interest rate, or a very short loan term.
Instead of looking for a guarantee right off the bat, you should look for the right kind of lender for your credit situation. At Auto Credit Express, we work with a nationwide network of special finance dealers that know how to handle bad credit, no credit, and even bankruptcy. Don’t hesitate to get the help you need! Fill out our fast and free car loan request form, and we’ll get to work for you.