When you have poor credit, it can be difficult to purchase an automobile using conventional financing methods. One alternative is to purchase a car from a dealer that offers "buy here, pay here" deals. Basically, the dealership, rather than a financial institution, provides the financing. Before signing on the dotted line, check that the deal works for you.
1. See That the Dealer Reports Your Payments to the Credit Bureaus
If you struggle with bad credit, you need to make sure you are taking steps to rebuild it. See that the company you decide to work with reports all of your payments to the major credit bureaus. By doing so, you ensure that the payments you are making are reflected on your credit report.
However, you must remember that late or skipped payments also get reported. Take steps to make all of your payments on time so that your payments don't hurt your credit report.
2. Understand the Terms of the Deal So You Can Compare Offers
When you purchase a car using a "buy here, pay here" program, expect the interest rate to be higher than with conventional financing. This safeguards the dealer in case you default on your loan.
However, you need to understand exactly how much interest you will be paying so that you can compare offers. Another item to verify is the length of time you are expected to make payments on the loan.
Fees associated with the loan should also be taken into consideration.
Ask what happens if you do make a late payment. Some dealers have a grace period while others may charge a late fee on all payments made after the due date. Others may start repossession proceedings immediately.
3. Research What the Warranty Covers
Most "buy here, pay here" establishments offer a warranty on their vehicles. Understand what exactly the warranty covers and how long it lasts. If the establishment does have to fix your car while it is under warranty, will it provide you with a rental car while you car is being fixed? Know what to expect when an unexpected car repair strikes.
You may have the option to purchase an extended warranty on your car. Coverage provided by extended warranties varies extensively. Certain contracts require you to pay a specific amount each time you activate the warranty. Some drivers like the assurance provided by a warranty, while others prefer to keep the money on hand and pay for necessary repairs themselves.
Utilizing a "buy here, pay here" program can quickly get you into another set of wheels. By understanding the deal, you can make sure you are making an informed buying decision.
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