Auto Dealer Financing

Really bad credit auto loans

Have really bad credit? Consider a form of auto dealer financing called buy-here-pay-here financing. For these auto loans you skip the lender altogether applying to the dealer for your auto loan. Not suprisingly this form of car dealer financing is for used car loans. Here are a couple of things to keep in mind with buy here pay here financing:

• Shop dealers. Buy-here-pay-here dealers are easily found by looking for signs out front that say “We Finance” or “Easy Credit”. Bad credit car loan rates vary widely, so shop at least three buy-here-pay-here dealers for the best combination of both car and auto loan. (For an alternative to used car dealers, read about car-buying-services here.)

• Have your downpayment ready. Auto dealers will commonly ask for up to 1/2 of the purchase price of the car as a down payment. Not surprisingly this just about offsets the dealer's investment in the car. Click here for more on working with used car dealers.

• Only finance as long as you have to. While interest rates vary by credit score, geography, etc., they are commonly north of 14% and may run to 17-18% or higher. Look to refinance as soon as you have re-established your credit.Estimate your car loan rate here.

• Remember, the dealer is the bank. Because the dealer is not selling on the loan, you will make payments to him or to his captive finance company.

• Keep in mind that they in many states they can repossess the car the day after a payment is due if it is not received. Some will wait a couple of days in case you mailed the check, but all look to get the car back quickly in the event of default.

Related Links

• Have good credit? Read our good credit auto loan tips.

• Have merely bad credit? Read our bad credit auto loan tips.

• Thinking of a used car? Read our used car loan tips.

Disclosure: We developed the content for SmartCarCredit™ while working with automotive industry clients. We hope you find it helpful in making informed decisions. While we believe the information to be accurate, we do not guarantee its accuracy.