Dealing with a low credit score is a possibility that they may affect any person, at any given time. It is a normal thing. However, having a low credit score might make it hard to purchase a car from many dealerships. It is even much harder to purchase a car when you have a bad credit score and at the same time have no money for a down payment. This is because lenders often have stricter policies towards people who are struggling with their credit score and to those who have no money down for the auto loan.
Lucky for you, there are buy here pay here no money down bad credit car dealerships that might assist you. Thanks to the internet, it is now quite easy to locate dealerships which specialize in providing no money down auto loans. Let us take a look at the nitty-gritty of acquiring your next car with a poor credit score rating and no money down.
No Money Down Car Loan – what exactly is this?
Also known as no cash down auto financing or zero down auto loans, no money down car loans happen when someone does not have the initial deposit for the car. In most cases, this usually happens to buyers with a credit score of 700 and above. A down payment is comprised of paying for the car in advance in cash. Some dealerships also accept trade-in offers.
It is normally in the buyer’s interest to pay a large amount of money as a down payment for a number of reasons. The major one being that when a large part of the total cost has already been paid, your monthly payments which are dependent on the amount being financed have their rates going down. Placing a deposit for a car shows the lender how serious you are about owning the car and that you will be committing to pay the monthly rates on time. Below are a few other reasons why a down payment is advised;
- Reduces the amount of time you have negative equity
- The principal balance is lowered from the word go hence the amount you pay in terms of interest is lowered
- The loan term can be shortened helping the buyer pay off faster reducing high-interest charges which may be accrued in the long run
Why should you get a no money down auto financing?
It is advantageous to get enrolled to a no money down auto financing option due to a number of reasons such as;
- You can get a loan to purchase the car you want even with bad credit scores
- You can always get approval even after being turned down elsewhere
- Having little funds does not negatively interfere with whether your loan gets approved or not
- Getting approval is quite fast and it can be done online
Bad credit no money down car dealerships
When searching for your next car without a down payment or with a bad credit score, you may come across one or two car dealers offering no money down bad credit offers. You may also keep your eyes and ears open as such offers are sometimes hard to come by. This is because getting a subprime lender who is willing to give out a car to someone with a poor credit score is quite hard especially if they are not making a deposit. You may have to move from dealer to dealer or take more time on the internet browsing for such offers.
It should be noted, however, that not all auto dealerships are working in conjunction with subprime lenders. There is no guarantee that lenders who offer bad credit loans have signed up with bad credit no money down auto dealership near you.
Once you find a dealer that has such offers, the first thing they will do is to pull out your credit report. Your employment status and level of income will also be verified. There are several other factors which we shall look at in this article which will also have to be verified and confirmed before the lender can determine what type of auto loan you qualify for and which dealerships can get you a good offer.
It may be hard to find one dealership willing to strike a bad credit no money down car deal. In case you find one, then lady luck is on your side. It is still in your best interest to have and make a down payment especially if you have bad credit. Doing so helps you avoid the high-interest rates which usually accompany bad credit no money down buyers.
Bad credit financing
Auto financing works best for buyers who want a buy here pay here no money down bad credit situation. A car can be financed for them and they can pay at a later agreed time. As earlier mentioned, having both factors to look after can result in higher expenses when paying back for the car. Having unpaid credit cards, mortgages, late or missed payments, and such like related factors can be a hindrance to getting approved for bad credit no money down auto loan approval.
Putting a no money down or zero money down auto payment plan, you should at least try to renegotiate with your dealership to lessen your monthly burden. As expected, you would have to pay them back generously at every month so it will be in your best interest to have them reduce the rates or relook into the terms of repayment.
No money down car loans
Getting a no money down car loan is hard but that does not mean it is impossible. For many dealerships, they do not just look at your credit score. A number of factors have to be taken into consideration apart from just fixing your poor credit score. Some of those factors include;
- Opting for a low debt to income ratio by purchasing a rather inexpensive vehicle. When you do this, only a small part of your monthly salary is deducted to repay your car loan.
- Hopping from one employer to another is also another big hindrance to increasing your chances of bad credit no down payment car loan. Try to show the stability of your employment at one particular place for a longer period of time.
- Apart from showing the stability of your employment status, you should also show the stability of your residence. Stability here means having lived at the same address for an extended period of time. You are likely to increase your chances of getting assistance from the lender if you can prove you have been and will be residing at a particular place for a long period of time.
- If you receive your monthly salary through your bank account, give the lender permission to automatically deduct the monthly installments as agreed. This is not only convenient by saving everyone’s time but is also a way of improving the level of trust between you two.
Buy here pay here option
Buy here pay here is an option for those buyers who have no down payment or another vehicle to trade in. The lenders who cater to such people usually advise them to get their low-end vehicles. Buy here pay here (BHPH) car lots dealers are different from other dealerships as they offer car financing offers on the spot. Whether you have a bad credit score or no credit, buy here pay here car lots are the ultimate choice for you. Even with good credit and you may not need financing, buy here pay here dealerships can offer you very great offers on certified pre-owned cars.
When you opt for this arrangement, the work of the bank or other third-party lending parties will be done away with. These dealers will be directly in charge of the whole process. With stricter fee policies and faster repossession, buy here pay here arrangement has its own advantages and a few drawbacks.
Pros of buy here pay here arrangement
When you have an older car model and wish to get a newer one, a trade-in deal is the best for you. It is similar to killing two birds with one stone.
Without the involvement of third-party lender and banks, you are able to purchase a vehicle and set up loan repayment structures at the dealership. While there may be speculations that buy here pay here dealerships charge way exorbitantly, there are many which offer very low-interest rates according to how the negotiations with the buyer go. Some even charge interest rates for as low as 15%.
While this might be a surprise to many but most BHPH car dealerships have a return policy whereby the buyer can return the car if they do not like it. The dealership can even have up to 48-hours return policy. During this period, the buyer can test-drive the new car on different roads and even compare it with other deals. During this period, the buyer is under no obligation to accept the offer.
Most buy here pay here car lots offer warranties on all their certified pre-owned vehicles on top of any valid warranty from the manufacturer.
Cons of Buy here pay here arrangement
Although the car dealership may have lots of cars makes and models, you are restricted to only a small number of vehicles which fit your financial situation and also the number of vehicles the dealership has in its inventory. Make sure to check the inventory online or call the dealership prior to making a physical visit.
Higher interest rates
The general feeling that many buy here pay here car lots offers very high-interest rates is true. This is in comparison to other lenders and especially when you have a good credit score. However, not all charge exorbitantly. Some buy here pay here dealerships can charge as low as 15% on interest. Be sure to first conduct extensive research before reaching out to a dealership. Furthermore, ensure to go through their terms and conditions not to miss any details which might get unawares in the future.
This is somewhat related to keenly going through the terms and conditions of the service before committing to anything. Some buy here pay here car dealerships may hide some fees from you (some actually do so intentionally). While going through the paperwork, ensure to inquire about some important chargeable services which may have not been brought to your attention such as;
- Handling and administration fees
- Inspection fees
- Delivery fees
Also ensure that the price you are to pay, the interest rates, and when the payment will be stopped is made clear from the word go and that no additional charges will be incurred by you in the future.
Not reporting your credit scores
Most legitimate BHPH car dealerships report your payment history to the credit bureau or the relevant authorities. This helps you rebuild your credit score from bad to good. However, never assume this is happening. Some buy here pay here dealerships do not report your payment history. Ask the dealership on what their policy on credit reporting is.
Buy here pay here no credit check
Getting a car from a buy here pay here auto lenders is possible. This means that you are not obligated to undertake a credit check to confirm your credit score. Even if your credit score is poor, you will still be viable to get a loan. Whether you are a first timer and does not have any credit history or you have a bad credit score, then this is the ultimate pick for you.
When you apply for a no credit check arrangement, the dealers will not even bother to check your credit score report. This does not, however, mean that your loan approval is guaranteed. The lenders will use other means to judge your viability for an auto loan. Supplemental data which includes your rental and utility payment information is accessed and verified.
There are other requirements which ought to be met, depending on the dealership or the laws governing the same in that area. Such requirements include;
- Applicant must be of legal age
- Shows proof of permanent residence
- Has a steady source of monthly income and has a stable job
- Active phone numbers, both for work and home
- Valid addresses (Physical, contact, etc.)
Tips for buy here pay here no money down bad credit auto loans
If looking for a zero down auto loan, it is important to adequately equip yourself with a number of tips in order to increase your chances of getting approval. It is also paramount to have certain expectations and know what results you may achieve when you apply for one. This helps one to prepare adequately before applying. Here are a few tips you can follow;
- Always check and confirm that your credit score and reports are error-free. If you want to apply for an instant auto loan approval for bad credit, you must have your credit score with you. Ensure that there is no disputing information on your report before applying.
- Consider a trade-in option if you have an older car. While most lenders advise you to make a down payment, you may not always have the right amount of cash for that purpose. Your older car can act as a down payment and you will live to pay lower interest rates charged on your monthly installments.
- Prepare to pay more if you have opted for the buy here pay here down payment option. These lenders will want to make up for the lack of a down payment by charging higher interest rates, meaning you will end up paying much more. You can always do the math and confirm whether it can be an option for you or not.
- Go through the paperwork not to miss any details. Regardless of the type of auto financing option you are going for, always go through the paperwork very keenly before signing anything. Sometimes, there might be some clauses or writings on the terms and conditions which when you sign up for without knowing, you can end up losing more money than you thought. Should anything not sound familiar with you, never hesitate to ask questions.
- Keep verifiable employment and income documents ready as you start the process of application. This saves all parties the time that would have been used to initiate a verification process. Doing so almost guarantees you a faster approval.
- Always go for a cheaper option so as to not strain your finances in the future. Choosing an inexpensive certified pre-used car will be ideal for you as it ensures that not much of your monthly income will go towards loan repayment. Doing so you can even have enough cash to cater for your other needs.
- Get yourself a creditworthy co-signer to co-sign the loan for you. It always makes the entire process seamless.