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How to Finance a Car if You Have Bad Credit

Few things in life are as defeating to a car owner as when a car breaks down. It usually signals hundreds of dollars worth of repairs at best. In fact, the average car owner in the United States spends over 1% of their yearly income on car maintenance. Depending on the age of your vehicle, that price could be higher. Eventually, it becomes too much to keep feeding your car a growing percent of your paycheck, and when that time comes, it means a new investment - making payments a new car or buying one outright.

It might be surprising to know that most Americans cannot actually afford to pay for a car outright. Adding to the national debt, a whopping 107 million Americans have an auto loan taken out in their name. For at least 40% of Americans with low credit scores, taking out a loan for a new car isn’t always an option. This often leaves them stuck deciding between paying for a used car or leaning on relatives and friends for a loan. However, there is one option that is less talked about - the buy here pay here auto lot. Bad credit car financing is easy when you purchase your car through a buy here pay here auto dealership like AutoBank of Kansas City.

Are you wondering how the process works? Here’s a quick look on how to finance a car with bad credit through Auto Bank of Kansas City.

Understand your wants and your limits

When it’s time to buy a new car, it’s easy to get caught up in the daydreams. The first step toward car ownership is always to think about the type of car that you want. It might be tempting to finance that little hot rod that you have your eye on, but it’s more important to think about the big picture. How many children do you have? What sort of work do you do? Do you want to make this your daily driver? Would you like this to double as a recreational vehicle? Questions like this help you narrow down your search at a buy here pay here lot.

Unlike dealerships, buy here pay here lots likely will not have the exact make, model, and color of car that you are looking for. Additionally, a dealer will probably show you vehicles on the lot that are within your spending limits. Keep this in mind and your dealer, and you will be able to find a car that works for you potentially on your first visit.

Fill out an application and get approved

Some buy here pay here financing establishments don’t require you to fill out an application that references your credit score. If they do, it is doubtful that you will be turned away for having a low credit score. Instead, they will use the information on your application to work with you on a lending limit that is within reason for you. This might mean making a few sacrifices on the car of your dreams (like not getting that big 2018 Toyota Tundra you’ve seen plowing through the snow in previous seasons’ commercials), but it will allow you to get a good and dependable car within a lending budget that meets your needs.

Once you settle on a lending amount, you’ll pick out your car and be approved. This process takes a little time, but usually, you are out of AutoBank of Kansas City within the same day.

BHPH used dealership

Make a down payment

Like many brand-name dealerships, buy here pay here cars require down payments. The good news for potential auto buyers is that at most buy here pay here dealerships allow low down payments of only a few hundred dollars (sometimes even less!)

Your dealer will work out the down payment agreements with you before signing the contract. It’s good to note that you will save more in the long run with a higher down payment. That’s pretty typical of all forms of financing - from student loans to dealership financing. However, buy here pay here dealerships understand that it is sometimes less financially burdensome to make more substantial long-term payments than it is to make a big payment up-front, which is why that option is offered. Give the down payments some thought before going into the auto lot and then talk with your lending dealer about the benefits and drawbacks of a lower down payment.

Make agreed-upon payments until it’s officially yours!

You’ll drive away with a new-to-you car at the end of the application process, but for the car to be officially yours you must continue to make the agreed-upon payments until they are entirely paid off. In many cases, this takes as little as a year and a half. Talk to your lending dealer about the differences in payment terms to decide what is ultimately right for you.

A Run-Down of the Benefits of Buy Here Pay Here Financing

Buy here pay here financing is an excellent option for those with lower credit because it affords them the ability to finance a car without having to go through traditional lending processes (which often let them down). For those with good credit, however, there are also benefits. Payment periods are usually shorter than with traditional dealerships, which ultimately allows buyers to save. Additionally, buyers can drive off the lot with a used car the same day in most cases. Finally, financing through a buy here pay here dealership can help rebuild credit while providing car owners with the additional benefit of having their own car.

If you are in need of a new car but have bad credit, AutoBank of Kansas City can help you out. Stop by one of our two locations in Kansas City, Missouri to take a look at our inventory or to meet with one of our financing specialists. We’ve helped the residents of Kansas City and the surrounding metro areas finance the cars they’ve needed for almost thirty years. To contact us, or for more information about our sites, visit our homepage.