Bad Credit Car Buying – Why Dealerships Request Down Payments and How to Avoid Them
Author: Jason Lanier
One thing that confuses a lot of people about buying a car with bad credit is the request by the dealership for a down payment. While most banks will require money down for auto, home and boat loans, it’s not the same with auto lenders that offer loans through dealerships. If you haven’t been able to get a bad credit auto loan with no money down at a local dealer, there are options available through select online loan companies.
Down payments are usually requested by dealerships as either a stipulation of loan approval or as a way of adding profit to the car sale.
As a Stipulation: If a down payment is required as a stipulation of the loan approval by the lender, then it’s because the loan company will not advance the full amount of the purchase price including tax, tag and title. The dealership, selling the car at a retail price cannot make as much profit on the car sale under these conditions. They have to make up for it somewhere and requiring a customer to put money down is the typical source of that additional money to cover the full amount.
As Profit: Your down payment may literally disappear from the loan contract. Salespeople getting paid 25% of the front end profit from the purchase price of a vehicle, get paid 0.00 for every 00.00 that you have for money down. Car salesmen are normally trained to “work customers” for cash down payments and those that do, usually have more profitable careers. This is especially the case with working with customers that have bad credit.
Avoiding the Down Payment Game: You can save money by arranging your financing outside of a car dealership, especially if you have bad credit. There are companies online that allow you to bypass the dealership finance department altogether. Auto loan companies that specialize in helping people that have credit problems can provide lower interest rates and better overall terms with no money down financing programs.
Click Here: www.BuyingCarswithBadCredit.com can help with auto financing options for people that have low credit scores. Getting approved is easy and takes just a few minutes. You can also get a quote for an extended car warranty to see how much you can save on a service contract by buying direct.
car buying?
the car i have right now is giving me major problems so i was thinking about buying a new 1. problem 1 i still owe about 4k on the car i have now 2 im not working cause im going 2 school full time n am surviving on financial aid and loans. is there a way of getting a car w/o a job is someone cosigns?
Any financial institution that is going to lend you money wants to know how you are going to be able to pay back the loan! You do not need a job, but you need a steady souce of income! It appears that you have neither!
Some may consider the loan with a co-signer, but it is going to be hard!
Good luck!
Car Buying?
1. Will paying cash or check for a used car save me from hidden charges and other fees which happens when you finance a car?
2. I would appreciate if someone with car-buying experience help me out or can give me really good tips/advice on how to negotiate with a car dealer.
By paying cash, the only fee you avoid will be finance charges. The actual vehicle sales numbers should not change. I will give you a link to an actual buyers order which you can bring with and fill out when you buy the car. It will expose all, if any, fees the sales associate is charging you.
http://www.theautoevaluator.net/Worksheet.html
actual form:
http://www.theautoevaluator.net/dealerworksheet.html
As far as negotiations, the best thing to do is to offer a commitment to purchase based off vehicle facts and comparison. I will give you a link for this also. You can email me if you have more questions. Good Luck.
http://www.theautoevaluator.net/Price_Neg.html
Car buying?
Is buying my first car off ebay a good idea?
Yes, because I know at least in my case I don’t have much money to buy a first car and you can definitely get a good car from the price. I would suggest getting it from a dealer off of there though because it’ll probably come with some kind of warranty and you know it’ll be clean.