Subprime Auto Loan Lenders and Their Victims

Just because you have bad credit does not mean that you do not need wheels. If you have been turned down by traditional lenders, you may want to take advantage of subprime auto loan lenders. These are typically known as Buy-Here-Pay-Here dealers. Yes, a market exists for granting auto loans to folks with poor credit. A few mess ups in your credit should not force you to walk, or catch a bus or cab everywhere. But, a poor credit borrower must be careful – sometimes these lenders are a little less than scrupulous.Double DigitsHaving a poor credit history means that any lender allowing you to borrow money is taking a substantial risk. This risk is reflected in the higher interest rates these lenders charge. These can be in the double digits – sometimes 20%; while rates offered to those with good credit range in the low single digits. You might have to come up with a substantial down payment as well. Any poor credit borrower should use the internet to shop around for the best rates and repayment terms. The optimum maneuver is to have your financing ready before you even step onto a car dealer lot.No Free GiftsIf you must use a buy-here-pay-here dealer/lender, or an online subprime auto lender, understand that they can get very paranoid about you missing even one payment. These dealers may seem to be really nice guys when they offer to throw in a free GPS option. The motive is entirely selfish. That way they always know exactly where the vehicle is. If you are behind on just one payment, you may get up in the morning or leave work in the evening and find your vehicle gone.Do Not Play the GameHaving missed a payment, you now find your vehicle repossessed. Your credit is now even deeper in the pits and you have no transportation. With a car repo on your record, you are not going to get another lender any time soon, not even a subprime auto lender. But, the dealer is going to do just fine. From you they have received a down payment, plus a number of monthly payments, and now they have your car to sell again. Nice game. Keep your payments current.The Good SideAll that being said, getting a subprime auto loan is not all that bad. Just make sure you have the budget to meet your monthly payments. And before you approach a car salesman, have enough money for a down payment, tags and title fees, and insurance costs. If at all possible, have your financing lined up, too. You can usually get better rates on the Web than you can get from a buy-here-pay-here dealer. If you are forced to negotiate with a dealer, keep reminding them of the better rates available on the Web, even if you have not been able to land a subprime auto loan there.Another Good ThingTaking out a subprime auto loan can do wonders for your credit scores as long as you keep your subprime auto loan payments on time and satisfactorily pay off the debt. Figure that some of the cost of high interest rates is payment to get your credit history into a better place. Have all the factors mentioned above in mind when you search the Web for a subprime auto loan, and especially so when you approach a buy-here-pay-here auto dealer. By doing so, you could become a happy driver with better credit scores.