Bad Credit Car Buying – Why Dealerships Request Down Payments and How to Avoid Them
One thing that confuses a lot of people about buying a car with bad credit is the request by the dealership for a down payment. While most banks will require money down for auto, home and boat loans, it’s not the same with auto lenders that offer loans through dealerships. If you haven’t been able to get a bad credit auto loan with no money down at a local dealer, there are options available through select online loan companies.
Down payments are usually requested by dealerships as either a stipulation of loan approval or as a way of adding profit to the car sale.
As a Stipulation: If a down payment is required as a stipulation of the loan approval by the lender, then it’s because the loan company will not advance the full amount of the purchase price including tax, tag and title. The dealership, selling the car at a retail price cannot make as much profit on the car sale under these conditions. They have to make up for it somewhere and requiring a customer to put money down is the typical source of that additional money to cover the full amount.
As Profit: Your down payment may literally disappear from the loan contract. Salespeople getting paid 25% of the front end profit from the purchase price of a vehicle, get paid $250.00 for every $1000.00 that you have for money down. Car salesmen are normally trained to “work customers” for cash down payments and those that do, usually have more profitable careers. This is especially the case with working with customers that have bad credit.
Avoiding the Down Payment Game: You can save money by arranging your financing outside of a car dealership, especially if you have bad credit. There are companies online that allow you to bypass the dealership finance department altogether. Auto loan companies that specialize in helping people that have credit problems can provide lower interest rates and better overall terms with no money down financing programs.
Click Here: www.BuyingCarswithBadCredit.com can help with auto financing options for people that have low credit scores. Getting approved is easy and takes just a few minutes. You can also get a quote for an extended car warranty to see how much you can save on a service contract by buying direct.
Find legitimate auto loans for bad credit at www.BuyingCarswithBadCredit.com.