Bad things happen to good people. Everyone falls on hard times. The difference is in what you do to get back onto your feet. When you’re buried in debt it can feel like the weight of the world bearing down on your shoulders. While you need to take out loans to re-establish credit no one will loan you anything to do so. Getting a credit card with a small credit line is next to impossible and it would hardly do anything to improve your score anyways.
So what’s the answer? Unlike other used car dealerships, buy here pay here dealers are typically the only car lots willing to take any kind of chance, because they’ll finance bad credit. They are known as a buy here pay here car dealership, special finance or bad credit auto dealers. The only difference being that special finance usually deals with people who want to buy newer cars.
You’ll find a special finance department in much larger chain dealerships. These loans usually cater to people with great job history who’ve just had a bankruptcy discharged. They have bad credit but no bills.
If you still have a lot of other bills and things to pay off the only chance you have is buy here pay here.
What is a Buy Here Pay Here Dealership?
Buy here pay here simply means that the dealer supplies the financing instead of the bank or credit union.
They will still take a chance on you even with a lot of debt. Some of them are more flexible than others as well as being more understanding. Like any other dealership you should do your research. No one wants to buy a car from a place that will take advantage of you and treat you poorly. Find local buy here pay here car lots that are accepting of your credit situation.
Once you find the right place you have to make sure they will either report to the credit agencies or have an outside company do so. The worst possible scenario being that you pay off the car loan and it doesn’t ever get reported.
The reason this is so important is because most places who will loan you a car want to see you pay down your credit history first. They won’t loan you anything else until you’ve proven you can handle debt. A buy here pay here dealer will take a chance and give you a large loan despite the fact that you’re in a lot of debt. If you pay off that large piece of debt and that gets reported you’ll have something to show that says you can handle your finances. This is an excellent way to get some positive momentum working back into your favor.
These loans are shorter term. Try to pay it off as fast as possible so you can move on with your life. The faster you pay the loan off the faster your credit will increase. When you’re done paying it off, you’ll have credit history and most likely a higher credit score than when you first started. Odds are you can get a credit card in your name and a car loan with a much lower interest rate.
A lower interest rate will save you a lot more money than many people realize. Those percentage points add up over a lifetime to a lot of money.
While a lot of people will bad mouth a buy here pay here dealer the truth is when no one else will take a risk on you, they will. They are probably the last group of people who will willingly loan money to someone who goes under the high risk category. Just like any other business, of course, not all of them are honest. There are honest bad credit auto dealers out there. Like anything else you have to take the time to look for them. Once you find them establish a solid relationship and they will take care of you.