Secured Auto Loans: Is It One Thing?
Secured auto loans do exist. These types of auto loans, however, may not have the most desirable rates or terms. In fact, secured auto loans are most often found at Buy Here Pay Here dealerships that do not check your credit. It might sound good if you have bad credit or no credit, but there are some drawbacks you should be aware of before you embark on this type of loan.
Buy Here Pay Here Car Dealers & Secured Auto Loans
Resellers Buy here, pay here (BHPH), also known as in-house financing or hold-all dealerships, may be a good option for some car buyers with bad credit, but they are not for everyone.
These places are able to offer what can be considered as secured auto loans because they do not turn away applicants due to credit. In fact, the majority of BHPH dealers don’t even look at credit scores or credit reports. Instead, they use your income and down payment to determine whether or not they should approve you.
While the ease of getting approval makes it an option for many types of buyers, there are some drawbacks to consider. You are required to make a deposit, and the amount needed depends on the price of the vehicle you choose. In addition, the selection is limited to used cars, as these places do not carry new vehicles. Take your time when looking at these lots because you can find everything from the latest used car models to older vehicles with higher mileage.
If you need a long term solution that can help improve your credit score, you might be better off with a bad credit auto loan from a subprime lender.
5 tips for getting a bad credit car loan
To have the best chance of getting approved for a bad credit car loan, keep these five tips in mind:
- Your credit is important – You should always know where your credit is at before you apply for finance. If you know what’s on your credit reports and know your credit score, you can be ready when you take out a car loan.
- The choice of vehicle matters – It is possible to finance both new and used cars, even with bad credit, but you need to make sure you research the type of vehicle that best meets your needs. A new car may be more than you can afford at the moment, and there may be some great used options that still meet your needs. It is important to do thorough research on the vehicle before you start shopping for a car loan.
- Be prepared for the process – When applying for a bad credit car loan, you must be prepared to show the lender that you are the right choice for approval. This means meeting certain conditions including income, job and residence stability, proof of a working phone, a list of personal references, and a down payment.
- Don’t go it alone – If you think your credit is going to be causing a problem with your auto loan approval, you might consider adding a co-signer or co-borrower at your loan. These are two options that can give you a credit boost while increasing your chances of getting approved. Co-signers allow you to use their good credit rating to get approved. Co-borrowers, on the other hand, can give you a credit boost, while you can accumulate the income if they are your spouse to benefit from the loan together.
- Apply with the right lender – Applying with the right lender can make all the difference when looking for a bad credit car loan. Not all lenders work with people struggling with bad credit, while those who can usually work with special finance dealers and may not be easy to find if you don’t know where to look. Fortunately you have Auto Express Credit on your side.
Find the car loan you need
While everyone wants a guarantee on everything, you might want to think twice about a secured approval auto loan – just because you can get approved doesn’t mean the loan is a good deal. Sometimes lenders who guarantee approval before they know your personal situation can only get you approved with the highest possible interest rate or a very short loan term.
Instead of looking for collateral up front, you should look for the right type of lender for your credit situation. AT Auto Express Credit, we work with a nationwide network of specialty finance brokers who know how to deal with bad credit, no credit, and even bankruptcy. Don’t hesitate to get the help you need! Complete our fast and free car loan application form, and we’ll get to work for you.