How to Buy a Great Used Car If You Have Past Credit Issues

In the United States, 90% of all credit decisions are made by one company - FICO. There’s a problem with this, as most people need a decent credit score to make big purchases and the terms of their scores can be arbitrary. Sometimes, having a high balance on credit cards can be more of an influence on your score than your ability to make payments on time. Additionally, handling billions of people’s information leads to mistakes. The same report by Bloom noted that 1 in 5 Americans reported errors on their credit reports, and these errors often led to higher interest rates and declined credit offers. These statistics are worse in North Carolina, where on average Youngsville residents had a credit score of 697. This means that many people were below the “good” rating on the FICO credit score, which makes purchasing with credit a problem.

Luckily, AutoMax has the answer to those who need help purchasing a car due to past credit issues. With our in-house financing options, we can find affordable ways to help you drive off our lot with a new vehicle. However, buy here pay here lots are not the only ways to get a quality used car. Here are some of the other ways you can buy a great used car if you have credit issues.

Save Up and Buy It Outright

buying a great car used

Although most Americans do not have more than $1,500 in their savings account, it is sometimes possible for people to save up enough to buy a quality used car. Although it is dependent upon the year, make, and model of the car, buying a quality, pre-owned vehicle in the $3,000-$7,000 range is a definite possibility. However, this range might not get you the car of your dreams, and sacrificing on a car isn’t always the best option.

Instead, if you have a substantial amount of money tucked away in savings, it’s worth it to consider making a down payment on a used car at a buy here, pay here car lot. The chances are that down payment will make a massive dent in the amount you have to pay back, and ultimately you’ll have a greater range of vehicles to choose from.

Discuss Interest Rate Options With Dealers

If you opt for the traditional credit-based loan amounts with your bank, make sure you understand interest rates and APRs before taking out a loan. This ends up being one of the most significant customer pain points for those looking to take out a car loan. The good news? If your past credit issues are relatively limited and, perhaps, instead of having poor credit you have fair credit, you might be able to take out a traditional loan or line of credit. However, it might be that to do this your interest rate will be much higher than a loan customer with a good or excellent credit score and perfect credit history. If you are sure you can make monthly payments as they continue to rise because of interest, that’s fine. However, if you are cautious about the extra amounts you will have to pay as a consumer, its best to consider alternate lending routes.

Take out a Title Loan or Payday Loan

Title loans and payday loans get a bad rap. For the most part, the rap is due to misunderstandings with the terms of the loan, but some of it does come from the nature of the loans themselves. Payday loans and title loans are designed to help those who have poor or no credit, but utilizing them means you will likely have to pay back more (as you would any other loan) over a shorter period. Many people go into title loans without realizing what they are getting to. For purchasing a used car at a lot with financing options, a title loan might not be the best option. However, here are some of the pros and cons of using a payday or title loan to purchase a used car.

Pros: Quick and relatively easy loan approval, the ability to rebuild your credit, shorter payoff time means ultimately less interest paid and quicker access to full ownership of your car, no need for a good credit score because you can use collateral like your paycheck or old car title Cons: High interest rates, low repayment time means that occasionally it can be harder to make payments on time, payments must often be made in person, which means that if you take out a payday loan or title loan out of state you must travel to make payments, payments are often weekly rather than monthly, the risk of losing collateral is much higher than with traditional lending methods, you can only use collateral that is legally yours.

Visit a Buy Here Pay Here Lot

For the average car buyer, a buy here pay here car lot is the perfect opportunity to both purchase a quality used vehicle in your budget and to work on your credit over the long term. Buy here pay here lots work like this - a customer goes in with an idea of the car they want. It might be this idea is broad, or, perhaps they saw an ad in the local paper for a specific car on a buy here pay here lot that they have to have. Whatever the scenario, a buy here pay here dealership will work with a buyer on a budget, the amount per month they expect to pay, the type of car they want, and their credit history to see what kinds of lending options they have available to them.

For the most part, buy here pay here lots do not turn customers away because of past credit issues. However, a quick credit report will determine what type of lending option a car dealership might be able to offer to a customer, and from there the lenders provide solutions based on their credit report. Unlike payday or title loans, there is no collateral taken. However, these deals provide customers with the opportunity to rebuild their credit, which makes it a win-win situation.

AutoMax of Henderson and Youngsville are confident that they can help you find the right used car if you have previous credit issues on your report. For more information on the services and products we provide, call our Henderson location at (252) 430-1006 or our Youngsville location at (919) 570-1107. We offer roadside pickup and comprehensive payment options for all our customers.

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