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Bad Credit Auto Loans - How to Get Guaranteed Approval Even With Poor Credit Score?
If you're in the market for a vehicle and have bad credit, you've probably been asked by a car dealer or two about whether or not you have money to put down. This is common and depending on your credit score, you may or may not have to have a down payment. All car dealers have different requirements for money down and it can depend on a number of factors. Here, we'll take a look at how different types of car dealerships and lenders view down payments, as well as, how they can affect your loan approval.
New Car Dealerships
Most new car dealerships are able to apply rebates and incentives to reduce the need for money down. If you have negative equity in a vehicle that you're trading in, you may have to provide money down to cover the negative equity so that it's not carried over into your new loan. While buying a new car while having bad credit isn't so common, there are many manufacturer's that offer lower priced new cars with attractive financing incentives to make buying easier for people with lower credit scores. Kia and Hyundai are known for their bad credit financing programs and this may be something worth looking into if a new car is what you're interested in. You may wish to call your local dealer to find out about current rebates and incentives that you can use in lieu of a down payment.
Online Loan Matching Services
Services available online in some cases may be able to match you with a lender willing to help you get approved for a car loan with little to no money down. It's a matter of finding the right combination of vehicle and dealer, to work with your individual circumstances.
Having bad credit often leads to the need for a down payment when buying a car. New car dealerships may offer incentives or rebates to offset the need and used car dealers may be able to make the numbers work in your favor. Buy here pay here car lots generally always require down payments. Negative equity in the vehicle you're trading can prevent you from being able to buy without any money down.
Buy a Car With Bad Credit With No Money Down
The subject of car finance comprises the different financial products which allows someone to acquire a car with any arrangement other than a single lump payment. The provision of car finance by a third party supplier allows the acquirer to provide for and raise the funds to compensate the initial owner, either a dealer or manufacturer.
Car finance is required by both private individuals and businesses. All types of finance products are available to either sector, however the market share by finance type for each sector differs, partly because business contract hire can provide tax and cashflow benefits to businesses.
Personal Car Finance is a complete subsector of personal finance, with numerous different products available. These include a straightforward car loan, hire purchase, personal contract hire (car leasing) and Personal Contract Purchase. Therefore, car finance includes but is not limited to vehicle leasing. These different types of car finance are possible because of the high residual value of cars and the second hand car market, which enables other forms of financing beyond pure unsecured loans.
Car finance arose because the price of cars was out of the reach of individual purchasers without borrowing the money. The funding for personal car finance is provided either by a retail bank or a specialist car financing company. Some car manufacturers own their own car financing arms, such as Ford with the Ford Motor Credit Company and General Motors with its GMAC Financial Services arm, which has now been renamed and rebranded as Ally Financial. Indirect auto lenders may set risk-based interest rate, or “buy rate,” that it conveys to auto dealers. Car companies may then allow their auto dealers to charge a higher interest rate when they finalize the deal with the consumer. This is typically called “dealer markup.”  Markups can generate compensation for dealers and some (those of GM's Ally and Honda) have been found to use the discretion to charge consumers different rates regardless of consumer creditworthiness.
The funding supplier may retain ownership of the car during the period of the contract for certain types of financing. This interim ownership by a third party and subsequent leasing to the acquirer is far more typical for business assets than private ones, with the option of vehicle leasing being the major exception for private consumers.
The finance is arranged either by the dealer which provides the car or by independent finance brokers who work on commission.