In an ideal world, you would have time to improve your credit before buying a car. But life happens, and you may find yourself in need of a car loan with bad credit. If you have bad credit, you may have trouble getting financed through traditional lenders who work with some of the larger car dealerships. If this is the case, you may find yourself considering buying a car from a car credit car lot. Learning the pros and cons can help you determine if this is the best scenario for you.
The Cons of Buying a Car From Bad Credit Car Lots
- Interest Rates May Be High
One of the biggest downsides to buying a car from a bad credit car lot is that you can expect to pay a higher interest rate than you would finance a car with good credit. As a general rule of thumb, any time you are taking out an auto loan with bad credit, you should expect to pay a higher interest rate. This is because you are considered a higher risk of defaulting on your loan. The lender has to charge you more to make up for this risk and the percentage of people in your situation who do not pay the loan back.
- Their Car Inventory May Be Smaller
Another downside to buying from a bad credit car lot is that their car inventory may be smaller. When you have good credit, you can buy a car anywhere, allowing you to determine exactly what car you want. When you have bad credit, you may only be able to be financed at certain places, and they may not have the car that you really want.
The Pros of Buying a Car From Bad Credit Car Lots
- They Specialize in Bad Credit Loans
One of the biggest benefits of buying a car from a bad credit car lot is that they specialize in bad credit auto loans. If you have bad credit, they know which lenders will finance you in your situation. Many also offer in-house loans for those who cannot get financed from any other lending institution, helping you to get behind the wheels of a car.
- You Don't Have to Be Embarrassed
The other advantage to buying from a bad credit car lot is that you know that they know your credit is bad. If you walk into a dealership with bad credit, you may be embarrassed and nervous about them seeing your credit report. At a bad credit lot, they already know what to expect, helping you to ease your worries, fears, and embarrassment over a less-than-ideal credit score.
If you are looking to obtain a car loan with bad credit, a bad credit car lot can help you get the financing you need to get a car today. While you may have to pay a higher interest rate and have less choice in cars, it may beat going without a car or being denied for a car loan at bigger car dealerships. Contact a company like AutoStart for more information and assistance.