If you have bad credit and need transportation, you may consider going to a subprime auto loan lender. These businesses are sometimes called Buy and Pay Here auto lots. Yes, there indeed are lenders who are willing to grant auto loans to folks who have made some bad financial moves. These are useful to many folks, but could prove disastrous to others.
Watch Those Interest Rates
Subprime auto loan lenders are not known for low interest rates. They impose these rates because they are lending to folks who have a bad record of paying off debts and this cuts their losses if a buyer defaults. Others will enjoy much lower interest rates because they have good credit. There is some pain for every gain. Consider that with your subprime auto loan you are getting wheels, that you are being provided a chance to improve your credit , and (hopefully) learning some better spending habits.
Playing the Car Dealer Game
Things can be get a little tricky with subprime auto loan lenders. The dealer is going to throw in a free GPS system for your new (to you) set of wheels. Do not think the dealer being Mister Nice Guy. If you default on a payment, by as little as a few days, the dealer knows where the vehicle is and will not hesitate to grab it. It is almost as if they expect you to default; would be happy if you did. And, that may be the case.
Avoid Vehicle Repossession
Once a payment is missed, even if only by a short time, the subprime auto loan lender will start looking for the car. They will still have you on the hook for a loan, and after they grab back the car, they can put it up for sale again. Of course, this varies from state to state, but it is a serious mistake on your part and will be a two-part blast to you. You will lose your wheels, and no one, NO ONE, will make a subprime auto loan to you for the long foreseeable future. Your credit rating will become the lowest of the low.
Make Sure You Have a No-Fail Financial Plan
Obtaining a subprime auto loan is not really that bad. Be sure you have the capacity to make your payments in full every time they come due. And, do not forget, you cannot predict the future. If something disastrous happens, like losing a job or unexpected medical expenses, the subprime auto loan lender does not want to hear it. Your car is gone with the results mentioned above. Be sure you can make that payment no matter what catastrophe may arise. This is truly one time when it is better to be safe than sorry. Have a financial plan in mind and stick to it, including provisions for just plain bad luck.
Subprime Auto Loans Not So Bad
Actually, getting a subprime auto loan is rather easy. Often, you can go online, fill out an application (might take you a couple of minutes), and go down to the lot and pick out your car. You will need a down payment of some sort, but the dealer will work with you. Tags, title, and insurance costs are due at the time of purchase and may be required in addition to the down payment and the loan.
So, gather the bucks for the down payment and other initial costs, formulate a fool-proof repayment plan, fill out your subprime auto loan application, get your wheels, and make your payments on time. You will be able to get around while you improve your credit scores. Good luck.