Dealer or private party: car loans for bad credit


Deciding whether or not to go with a dealership or private seller could be largely dependent on your credit score and the type of lender you are qualified to work with.

Direct auto loan vs cash sale

If you want to get a vehicle from a private individual, you either need to pay cash or get a direct car loan for it. However, getting a direct loan from a bank, credit union, or online lender can be difficult if your credit isn’t the best.

Typically, direct lenders have higher credit score requirements than dealers who are registered with subprime lenders. Borrowers who have gone bankrupt, who have had credit problems along the way, or who are new to credit may all have trouble getting approval for a car loan from a direct lender.

Generally, credit unions can be more lenient on credit score requirements than banks because they are owned by their members. If you are a member of a credit union, having an account in good standing that has been open for a while is helpful if you want a better chance of getting approved for a car loan. If your credit score is bad, however, they may ask you to bring in a co-signer.

If applying from a direct lender hasn’t worked for you, you can pay for the private vehicle in cash if you have it on hand. There are some perks of paying with cash, like not having a monthly car payment and avoiding interest charges. Interest is the cost of borrowing money, but financing a vehicle also has its benefits.

To improve your credit score, you must take out credit and report this loan to the major credit bureaus. A cash sale will not be reported, and you could still be in the same type of credit situation the next time you need a car. With a car loan, however, you can pay off your stated loan over a long period of time, which can help you build a good payment history and, in turn, your credit score.

Special Financial Departments

For borrowers with credit problems, subprime lenders can be a great resource for auto loans and a way to improve your credit for the future. Subprime auto loans are reported to major credit reporting agencies, so if you manage the loan well, you can improve your credit score.

However, subprime lenders do not offer personal loans because they finance vehicles from the dealerships where they are registered. If you qualify for a car loan, you choose a vehicle from that dealer’s inventory that matches the amount of your approval.

When you have bad credit, improving your credit score should be a top priority. Better credit usually qualifies for better car rates and deals – and better interest rates mean saving more money over the course of your car loans. For many borrowers with bad credit, risk financing could be the way to increase your car buying power for the future.

Find a car dealership for you

Credit building is a marathon, not a race. Choosing the right lender for your situation means finding one that can offer you more than a vehicle – you should also be looking for the ability to improve your credit health over time.

Finding a dealer with the loan resources you need can be a problem if you don’t know where to look. Special Finance dealerships aren’t the easiest to choose from among the crowd, but luckily for you, we already know where they are. Were Auto Express Credit, and we’ve been connecting borrowers to bad credit dealers for over 20 years.

To start looking for your next car, complete our auto loan application form and we’ll search for a dealership in your area who is registered with subprime lenders. Our form is free, without obligation, and we’ll get to work for you right away!


About Galen A. Williams

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