Bad Credit, Zero Down Car Loans? YES!

Car Bad Credit Dealerships

Purchasing a car with a bad credit record

Buying a car can involve making a large payment. Unless you are lucky enough to have enough cash to pay the entire price, you will most probably seek financing. However, getting financing can become a challenge if you have bad credit. In such a situation, you need a bad credit car dealership.

No matter how good or bad your credit score is, you should always check your credit score before applying for a car loan. The US government has authorized to provide free credit reports. You can also approach one of the three big credit bureaus.


bad credit car Car Dealership

Online services of bad credit car dealerships

Bad credit car dealerships generally have websites that offer a range of services. Used car deals are listed for easy viewing, loan applications can often be submitted on their websites as well, and you can even make electronic payments.

Being able to check the loan amount either at an online credit service or in-person at a bad credit car lot is very helpful in planning a car purchase. Being able to make a loan application and getting pre-qualified adds more clarity to the entire process. It allows a prospective buyer with bad credit to start narrowing down the car models that he/she can purchase. Having the option of making online payments speeds up the process as the bad car dealership can verify and process your payment quickly.


How is loan eligibility determined by bad credit car dealerships?

A bad credit car dealership that offers loans will look at similar things that any credit or loan business would. These can include:

  •         A credit check on the car purchaser
  •         The employment history of the car purchaser
  •         Residential history of the car purchaser

If a bad credit auto loan is approved, then the next step is working out the details of the loan. Based on a few metrics, important loan details like the interest rate, the amount of downpayment to be put up by the purchaser, and cosigner requirements are determined. The cosigner can generally be someone with stronger credit, like the purchaser’s parent or spouse.


How can I find out more about financing a car purchase with bad credit?

You may have some preconceived notions about financing at a bad credit car lot. You might have heard bad stories or read negative reviews about such financing. However, there are plenty of success stories as well. The best way to find out more is to ask a bad credit car dealer the following questions:

  •         Can I get a vehicle without a downpayment?
  •         What is the interest rate?
  •         Who is offering the loan? Is it the car dealer or another lender? Is the quoted interest rate guaranteed?
  •         What is the total amount being financed?
  •         What is the final price of the car that I am paying? Does the final price include the interest component?
  •         Which cars am I eligible for based on my credit profile and approved loan amount?
  •         How long is the tenure of the loan? How many installments or payments do I have to make?
  •         Do you require credit insurance? Is there credit insurance available?
  •         Do you offer credit insurance or do I have to approach a third-party provider for that? Any recommendations on who to approach?
  •         Are there any penalties or charges associated with the loan being offered?

By asking the above questions to a few bad credit car dealers, you will be able to compare the offerings and select the best option. It is always recommended to shop around and get a feel for how the bad credit car dealer works. If an answer to one of these questions isn’t clear, then do not hesitate to ask for more clarification. If needed, speak with the manager. Make sure you record all the answers to these questions so that you can go back and compare. You can also bring up the recorded answers if the car dealer changes any of the terms during the final stages of a deal.

Getting the best possible deal at a bad credit car dealership

Having bad credit does handicap you a bit and limits your options when it comes to purchasing a car and securing financing for that purchase. However, it does not mean that you simply give up and accept whatever you get. You can still obtain value for your money by finding a good deal.

There are two things, in particular, that you can do to improve your odds of getting a good deal on a car purchase:

Check your score and improve it if possible

Firstly, do yourself a favor and actually check your credit score before you make any phone calls or visits to bad credit car dealerships. What if your credit report is actually better than you think? You never know until you actually see your report.

Another possibility is that there is some factual error on your credit report which is resulting in a bad credit report. If you find any mistakes, then have them corrected and get your credit report updated. Doing so can improve your credit score and you might not have bad credit after all.

If you are really worried about your bad credit and the lack of options that a bad credit car dealer if offering you, then consider delaying your car purchase. Instead, use that time to improve your credit score. That way, you will get more favorable terms when you are ready for the purchase.


credit score

Pay a larger downpayment upfront

Secondly, if you are in a position to, make a large downpayment. That will reduce the installment or scheduled payment amounts during the tenure of the loan. It will make things more manageable for you going forward. An added bonus of a larger downpayment is the possibility of getting a lower interest rate. Large downpayments can quality borrowers for such interest rate discounts.

Bad credit car dealers vs other types of lenders

A bad credit car dealership is one that offers in-house financing to car purchasers with bad credit or even no credit. They specialize in car loans and, therefore, have many more financing options than other types of lenders.

There are similarities between bad credit car dealerships and other types of lenders. For example, loan negotiations will involve topics like interest rates, loan tenure, and the amount of downpayment. As pointed out above, a larger downpayment gives the borrower the power to bargain for a lower interest rate.

Overall, bad credit car dealerships can offer car purchasers terms and incentives which conventional lenders cannot. These incentives can be flexible interest rates, increased services on the newly purchased car, and extender warranties. If the bad credit car dealer is digitally enabled, then even the payment and processing is quite fast.