Credit scores play a large roll in determining your approval and loan terms when applying for auto financing, so if you have bad credit scores, how can you finance a vehicle?

The Process of Buying a Car When You Have Bad Credit

Bad credit is an issue that is hindering many Americans right now, but it's not the end of the world. While slow pay, loan defaults, collection notices, and other black marks can cause poor credit scores and making getting any type of financing difficult; it's not impossible. Auto Credit Express is here to help you through the process of buying a new or used car when your credit scores are not in the best of shape.

First and foremost, you need to have a very good idea of what your credit report shows and what your credit scores are. You can do this by simply going online and pulling your free annual credit report.  Unfortunately, when you pull your credit report your score is not attached, and if you want to view both you will likely need to pay a small fee. Each credit bureau is required to allow you to pull your credit score once a year without charging you anything, but keep in mind that is not per calendar year, it is every twelve months. Therefore, if you pulled your report in December you are not able to pull it again until December of the following year without paying.

Each and every time you apply for auto financing on a new car or a used car, the lending entity you are requesting to borrow from will check your report. If you know ahead of time what it says you can prevent them from trying any sneaky antics that will cause you to pay more interest for your vehicle. You also need to know that bad credit car buyers will face higher interest rates and often shorter loan terms.

Advantages of Bad Credit Auto Loans

Vehicles are an everyday necessity to many people's lives, as they serve to be the only way to get to your job in a lot of areas that don't have public transportation. This is why we, at Auto Credit Express, don't allow past financial mistakes to rule your future. We understand that sometimes unfortunate circumstances can happen to even the most hard-working and responsible people, and it's not always their fault. Bad credit can happen for a number of reasons:

  • Bankruptcy
  • Divorce
  • Medical bills
  • Unexpected death

No one can see the future or what it holds for us, so we won't chastise you for your past. We work with a network of car dealerships that accept customers with bad credit histories around the United States, and we can get you into a car that you can afford.

When you get auto financing from us you will experience many benefits to your financial life. For instance, all of our dealerships will report your on-time payments to the three major credit bureaus: TransUnion, Equifax, and Experian. This will help you rebuild your credit score into good standing, and also help you in the future to secure any other financing you might need.

We also provide you with the convenience of applying for a pre-approval which helps you stay within your budget, and stop the possibility of falling in love with a vehicle that you can't afford. Our pre-approvals also help to relieve you from stress when walking into a dealership because you know you won't be turned away.  You will be able to walk in confidently, look at the vehicles in your price range, and drive home the same day in your new or used car without a hitch.

Disadvantages of Financing a Vehicle through Other Entities

As we stated above, high interest rates and short loan terms are typical requirements of a bad credit auto loan, but they aren't the only disadvantage. If you are having a hard time finding a dealer on your own in your area that is willing to take a risk on you, you may be stuck dealing with buy here pay here type of car dealerships.

These dealers are designed to help people in your situation get into a car no matter what. Often times, these places won't even pull your credit report because as long as you have the income to pay your payments and a down payment saved up they will give you a vehicle. This sounds awesome, right? Well it is, until you hear the last part. Because these dealers don't pull your credit report they also don't report to the credit bureaus. That means even if you pay every car payment on-time your credit score will not improve leaving you in the same boat you started in when you need to buy again in a few years.

All of the cars on buy here pay here car lots are used  - which actually isn't a disadvantage at all – but the fact that these cars may come equipped with GPS tracking and auto shut-off devices is. These dealerships don't know how likely you are to miss payments and possibly take off with their vehicles so they put these devices on the cars to make it easier for them if they need to repossess it. If you are even a day late on your payment they have the ability to shut down power to the engine until you come into the dealership to make your payment – which leads us into our next point.

Many BHPH, rent-to-own car lots, and tote-the-note dealerships all work in the same way.
They will work with your pay schedule to allow you to make weekly, bi-weekly, or monthly payments, whichever is easiest for you, but each payment must be made in person. There is no mailing a check in or paying online. You must walk into the dealership and pay them to get your receipt. This can be a big hassle if you don't live or work close to their lot.

Life After Your Pre-Approval

Once you have received confirmation that you have been pre-approved, which usually takes no more than 24 hours, we will set up an appointment with the finance manager at a dealership near you. You will be required to bring in some documentation that usually includes:

  • Valid Driver's license or state ID
  • Proof of Income
  • Proof of Residency
  • Bankruptcy discharge papers (if applicable)

Having these items ready to go when you enter the dealership will ensure that the process goes quicker and a lot smoother. You will be thanking yourself that you came prepared when you are able to drive your car off the lot the same day!

Once you have discussed your loan criteria with the finance expert, you will be directed to look at the vehicles on the lot. Usually someone with bad credit scores is steered towards the used car lot because they are cheaper, more affordable, and you're able to pay it off quicker. Don't fret, when we say used car we aren't talking about the old clunker parked in the back 40 that's rusted out that you have to pray every day in hopes that it starts. Instead, all of our dealers have gently used late-model vehicles in great running condition and many of them are higher trim models that you are able to get at a good used car price. Once you've picked out the vehicle you want, all there is left to do is sign the papers and take off.

As We See It

Bad credit can certainly slow you down financially, but at Auto Credit Express it won't stop you in your tracks. We embrace customers of all credit types and help them get the financing they need to continue with their life in ease and stress-free. We have been doing this for over two decades and have helped more than 1 million people, let us help you next!

To get started today, apply online using our quick, easy, and free online car loan application, and you could be pulling into your driveway with a new-to-you car tomorrow.