|
|
Cold Shoulders, Junkers and Bad Credit-Do they really have to go hand in hand??Jun 21 '01 Write an essay on this topic.
Popular Products in Cars
The Bottom Line With bad credit, your financing options are a bit limited but not necessarily impossible.
Being able to possess expensive cars, furniture and jewelry is no longer the inaccessible 'luxury' that it used to be thanks to the invention of credit. With a perfect credit rating, the sky's the limit (within reason of course). Maintain that record of perfection and you pretty much have it made material-wise for the rest of your life. Unfortunately, nowadays, many of us run into unforeseen circumstances in life that interfere with our ability to be the model of credit perfection. Whether it be illness, divorce, losing a job, or just plain irresponsibility, these factors contribute to the tarnishing of our credit ratings and inevitably start us down the road of denial letters, credit cards secured by your life savings, and basically an inability to enjoy many services requiring 'credit approval'. You are no longer an individual human being with special circumstances in this system of things; rather you are a number with a rating or point value beside it and by that you are judged. Sad but true. How do I know all of this? Well, because, sadly and simply put, I've been there. My problems are in the past but they still haunt me today and will do so for several more years. It takes 7 years for most derogatory information to be deleted from your credit report. Actually it's more like 7 years from the date of last activity reported so say for example you have an unpaid debt from 1995..you haven't had the cash to settle this account and figured that if you ignored it the creditor would leave you alone (bad idea by the way). Well, theoretically this information would be deleted in the year 2002-that is until this year when you make a failed attempt to start repayment on this debt and the creditor reports this information to the credit bureau. It's another 7 long years for ya buddy! Your best advice in that scenario is to chip away at that debt. It really does feel good to have those creditors off your back! So what-if anything- can a person with very bad credit do when they are in dire need of a good, reliable vehicle? Well, first and foremost, you need to examine your own situation as well as your intentions. Are you steadily employed? Can you come up with some cash for a down payment? Are you ready to make a change for the better and make your payments on time? That last question will more than likely not be asked by a finance company but it is of the utmost importance because you are ultimately in charge of the future of your credit rating and if you're not prepared to be responsible then I wouldn't recommend committing yourself to another debt. What do I do next? With bad credit, your financing options are a bit limited but not necessarily impossible. Your first option (not necessarily the best one) could be to visit one of the many 'buy here, pay here' establishments. Many of these are 'mom and pop' run businesses where you make payments(usually weekly) directly to the owner. The pros of going this route are that you usually won't have to come up with much for a down payment and the cars are usually on the less expensive side. The cons of this option are that your timely payments are not reported to the credit bureaus and along with the cheap price tag of the car usually comes a 'cheap' car. Be prepared to dish out more of your money for those repair bills! Your second option would be to scour the internet. You can simply type 'bad credit auto loan' into any search engine and be inundated with websites claiming "we can help you". I've noticed that many companies are readily willing to work with people with bad credit as long as you have no more than one repossession. Some websites that you may want to check out are AutoCreditFinders.com, 1800Approved.com and PeopleFirst.com. I have no firsthand experience with these companies but I have investigated them extensively and found them to have much potential. A third option is to contact the special financing department at your local dealerships. Many larger dealerships now have such a department and from my experience treat their 'bad credit customers' with the same respect as their good credit counterparts-and why shouldn't they?! You will more than likely have to come up with a large down payment (usually 20% of vehicle price) and your interest rates may be in the area of 20% but it's a price worth paying when you're trying to rebuild your credit. From my understanding, not all bad credit customers can get financing through these large dealerships though, especially those with an extensive history of repos, late payments and current past due accounts. If this is your case (and you're still really sure you need a vehicle) then you can give my last option a try. A route that I have personally gone myself in the past is visiting one of the franchises that contain their own finance company. Two of the larger franchises in the US are Ugly Duckling and JD Byrider. Both of these companies work in a way that is similiar to the 'buy here, pay here' business but with some added benefits. When you walk into one of these establishments, the first thing you will do is sit down and discuss financing. You're required to bring a recent pay stub, utility bill, your trade in, cash down payment and some personal references. Your situation is 'assessed' by the finance manager and based on your income and down payment, you are then given a walk around the lot and told which cars you qualify for. Their vehicles range anywhere from 5-8 years old and from my experience have all appeared clean and maintained.(as with anywhere, the larger the down payment, the newer the vehicle you get) I'm not sure about Ugly Duckling but I do know that JD Byrider offers a wonderful extended warranty that is worth purchasing. My vehicle was a 1996 and I received an 18 month/18,000 mile drivetrain warranty on mine. Not too shabby. The pros of going this route are that your payments (made bi-weekly) are reported to the 3 major credit bureaus and you will receive a clean, reliable vehicle. Cons are that your interest rates will be sky high and their finance company is stricter than your childhood friend's dad on a bad day! This (in my opinion) is more of a good thing because it really forces you to get your finances straight and doesn't allow for the 'oh, I'll just pay this bill a little late this month' syndrome. My Final Thoughts As you can see, having bad credit doesn't mean you're doomed for life but there is a hefty price to pay. Don't ever let any car salesman belittle you or make you feel any less of a person because of your credit rating. Everyone has/will hit a bumpy road once or twice in their lives and might get hurt in the process but that has nothing to do with who you are as a person. The bottom line here is to be fully prepared to incur a new debt. Take the time to gather as much of a cash down payment as you can because it will improve your chances of getting into a nicer vehicle. Make your payments on time and you'll be on the road to an improved credit rating and quite possibly the chance to walk into a dealership in the near future and hand pick the new car of your choice while having the comfort in knowing that you will get financed.  |
| Write the first comment on this review! |
