Right now, used cars are at a premium due to overwhelming demand and low supply. If you're a bad credit borrower this could spell trouble, but sometimes you just need to get a car now. A tote the note dealer may not be your only option, but it may be one worth considering if you need to get into another set of wheels without the wait.
What's a Tote the Note Dealer?
A tote the note dealer is someone who both sells and finances vehicles, typically from an independent car lot. These dealers are also known as in-house financers, because they don't rely on third-party lenders, and do all the lending themselves, or "in-house.”
These dealers are typically a good option if you've been turned down for financing due to your credit situation, or if you simply don't want to wait for an approval with a dealership that's guaranteed to pull your credit reports. Many tote the note dealers skip the credit check altogether.
Tote the note dealers only sell used vehicles, and if you can expect to pay a little more in interest shopping with one. You could consider this the trade-off for not having your credit pulled.
Why Consider a Tote the Note Dealer?
Knowing you're likely to face a high interest rate on a used vehicle, why should you consider shopping for your next car with a tote the note dealer?
The draw comes from the quick process, and the ability to get a vehicle if you have the money to put down and enough income. At many lots, all you need is proof of employment, a valid driver's license, and a down payment. Knowing you may be able to walk in and drive out on the same day can give many people, especially those with bad credit, peace of mind when you’re in need of a car.
Down payments for used cars at a tote the note car lot can be as much as 20% of the vehicle's selling price. And you typically need to prove that you meet a minimum income requirement with a recent check stub showing year-to-date income.
Is There a Catch?
The catch is that you may have to live with the higher cost of getting a car at one of these lots and that a loan from a tote the note car lot may not help you improve your credit score as other auto loans can.
You may also have to make your car payment weekly or bi-weekly, according to your pay schedule, instead of monthly. If you're in a pinch, need a car now, and don't want to wait to be turned down due to your credit score this could be for you.
Subprime Lenders Could Be a Solution, Too
If time isn't a factor in your getting an auto loan, but credit repair is, then you may want to consider shopping with a subprime lender through a special finance dealership. These lenders work with borrowers in all sorts of credit situations, including bad credit, no credit, and bankruptcy.
Subprime lenders do look at your credit reports and score, but they also have other stipulations for loan qualification. These factors, such as proof of income, residence, employment, a working phone, and a required down payment amount (typically less than required at a tote the note) work together to show a lender that you're ready to take on a car loan.
Additionally, your payments are all reported, so each timely payment can help improve your credit score and open up future auto lending opportunities.
Ready to Find a Car Dealer?
Whether you decide to go with a tote the note car lot or shop with a subprime lender, you don't have to start your search alone. Here at Auto Credit Express, we work with dealerships from coast to coast that are signed up with special financing lenders. Don't let your credit score be the determining factor in your financing. Let us guide you toward a dealership near you to save time and stress. Simply fill out our fast, free auto loan request form to get started now!
