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Car Loans With No Credit - Buy Here Pay Here Auto Financing

To get car loans with no credit is a challenge that many car buyers face. One last resort option that often comes through is buy here pay here auto financing. Check out this page to understand if this could be for you.

No credit buy here pay here car loans are also advertised as "credit rebuilding car loans," "second chance car financing" "special financing programs," "we finance," or directly as "no credit car loans."

How No Credit Car Dealerships Operate

With this type of financing, the buy here pay here dealership finances the car purchase for their customers themselves. There are no third party finance companies involved. That makes is more straightforward offer for them to offer car loans with no credit, but it also comes at a high price for the car buyer. About 1 in 4 car buyers at buy here pay here car lots is expected to default.

These used car dealers manage their risk by charging exorbitant amounts for the cars and adding on extremely high interest rates. Often, the cars are priced at 50% - 100% above their Kelley blue book values. Interest rates of 20% - 25% are not atypical. Some states will limit the interest rates charged to 25%, which is why you see a lot of deals structured at 24.99%.

 

 

No Credit Auto Dealers - How They Work

Getting car loans with no credit through buy here pay here dealerships is often a unique and different experience than traditional shopping at car lots. In terms of the car buying experience, the focus these no credit car dealerships is often on how much a person can put down for a deposit and what kind of payments they can make, before they will show you models of cars that you qualify for. The cars are typically older vehicles that have 70,000 - 100,000 miles on them. With a more traditional car buying experience, you get to be shown various models and allowed to test drive them before any talk of financing happens.

With these no credit car loans type of dealerships, you can expect the opposite, it's all about how much you can pay. Even though some dealers may not perform a credit check, a lot will. But a horrible credit score is no hindrance. You may not be able to get a nicer car, but you will often be offered something. They will often tell you that "your job is your credit." A deposit of $1000 with a $50 weekly payment can get you driving.

Payment must usually be made at the dealership itself. Some dealers are starting to accept other forms of payment, for example, through the phone or online. However, the majority of them still want you to drive in and making the weekly or once every 2 weeks payment. If you should skip your payments, the dealers are swift in repossessing, and any attempt to reason with them is not likely to be considered. Some will give a 30-day grace period, which is less than the 60 or 90 days with more traditional car financing.

Advantages

The main benefit of buy here pay here no credit car deals is that you can drive off with a relatively low upfront payment. Continuing payments can be low as well. If you have no other options, this is key. We all need transportation to get to work, so we can make a paycheck and pay off our bills.

Another possible benefit is that regular on-time payments of this car loan can build up your credit score. Some dealers will report your timely payments to the consumer reporting agencies. In fact, some will also indicate to you in their advertising or when they speak with you that the car loan acts as a credit rebuilding program. When you have no credit, a chance to demonstrate that you can fulfill a $10,000 loan over time can be very helpful to building up your credit.

Disadvantages

Even though you get a no credit car loan and low payments, over time, when you add it all up, you are over-paying for the car. If you have the cash upfront, or if you are able to qualify for other types of second chance car financing, you can get a much better deal.

Another disadvantage is that if you ever fall behind on your payments, you can expect the car to be quickly repossessed. Not only that, you may still be liable to pay for a portion of the remainder of your car payments if the car dealer is unable to sell it at the same price. Buy here pay here car dealers are notorious for being rough to reason with, since they know they are dealing with customers who tend to default, so you are taking your chances when you do business with them.

Instead of relying on finding car loans with no credit, consider if you could get a personal loan from family and friends, or waiting a few months to save up the cash. Since these people know you, they are lending you based on their trust and strength of your relationship with them that you will repay, so it's another of no credit check auto financing. There are also charities and non-profits that may have programs to help people with poor credit secure auto financing and ownership.

If you are at your wits end after exhausting all options, a no credit check car loan offered by a dealership may be your only choice left. If you choose to do this, make sure that you find a dealer that is as reputable as possible. As poor as the reputation of buy here pay here no credit car loans may be, there are still some good dealers around. In addition, consider your overall track-record in vehicle ownership. Even if you have no credit, you may have successfully paid off all your previous car loans, and some good dealerships will still be willing to offer you a good deal.

One gentlemen was able to find a buy here pay here deal offered by a Ford dealership. He had just come through a bankruptcy and bad credit to begin with. It cost him $1500 down and about $50+ a week for 2 years to get a 4-year old Ford truck. In addition, the dealer gave him a 2-year, 24,000 mile warranty. They may not be the norm but there are good deals that exist when it comes to getting car loans with no credit. It's going to take a little research and legwork to uncover them. Make sure to shop around for a reputable dealer, look over various websites as well as newspaper advertising.

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