Auto Finance Sales

Used car financing doesn’t have to be a difficult process. Due to the current economic climate, more people than ever are purchasing used cars instead of new cars.

Buy Here Pay Here

These dealers offer everything “in house”. They are almost always used car dealerships. Very rarely (if ever) will you find a new car dealer that offers this type of program.

Traditionally, this type of dealer/lender doesn’t require good credit. They say your job is your credit and that they will approve anyone that has a job.

It’s true that it’s easy to obtain car financing from these dealer/lenders. However, you must use extreme caution when purchasing an automobile from these dealers. The terms are usually very much in favor of the dealer. Most carry very high interest rates (usually the state maximum) and have strict repossession language. If you’re late by as little as a week in some cases, the dealer has the right to repossess your car.

Many of these dealer/lenders are classified as predatory lenders. They offer auto financing to people will poor credit and little ability to repay the loan. They charge exorbitant interest rates. It’s win-win for the dealer. If the customer pays the loan off they make a huge profit on the interest paid. Oftentimes the vehicle is sold at a price above its value, so the dealer makes additional profit on the sale. If the customer defaults on the loan, the dealer repossesses the vehicle, keeps all monies paid up to the point of default, then proceeds to sell the vehicle again and repeats the entire process.

The deal is oftentimes loose-loose for the customer. The customer purchases a vehicle for a price above its current market value at a very high rate of interest. The total of payments may come to double the actual value of the vehicle in some cases. Even if the customer honors the terms of the loan and pays off the vehicle, they’ve paid far more for the vehicle than they should have.

Having bad credit doesn’t mean you have to get involved in bad deals. Yes, you’ll always pay a higher interest rate when you have bad credit. You’re a riskier customer (you have a greater chance of defaulting), so the added cost of risk is factored in via a higher interest rate. However, the question becomes how much of a higher interest rate should you pay? There are many businesses out there that have made huge profits by taking advantage of consumers with bad credit.

Don’t be afraid to walk away from a deal that has terms that are not in your favor. You are almost always better off, in the long run, walking away from a bad deal.

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