Getting a car is one of the most notable things in one’s life not only because being a car possessor means being independent and having a sufficient credit score, but also because it makes life much simpler and more convenient, providing every individual with numerous opportunities.
But what if you want to get financed and you indulge in all the necessary procedures, only to find out that you are getting denied, time after time? After being denied a car loan, once, or even several times, you may wonder why it’s happening, and more importantly — you may feel discouraged, disappointed, helpless. In this situation, you’re probably aware that it’s not about the dealership — it’s rather about you. People who can’t get financed are usually the ones who can’t meet certain prerequisites to get a loan. One of the essential requirements is logical — the credit score.
How many possibilities do I have?
When acquiring a vehicle, you may have several options to choose from. These choices usually include financing, leasing, or simply purchasing a car at its full price, directly from the owner. Each of these options depends on many factors such as — the price of a car you want to purchase, your financial power etc. Determining what’s the best option is crucial, because covering your monthly expenses depends on the choices you make, and directly affect your budget and the quality of your life.
If you want to finance or lease a car you’re going to have monthly payments, and you have to be sure you can maintain them. In case you opt for the dealership financing, expect to get a contract where you would pay the amount of money they financed, plus the charge for their services. This process includes a bank or another finance organisation as a third party that will actually process and collect your payments. But before you go into all of this, the dealership needs to see your credit summary, in order to allow you to make a purchase. Here, the problem may arise, since many people don’t have the right score for purchasing a vehicle. When this happens, it might seem like you have no options left. However, it’s not always the case.
Defining guaranteed auto financing
What is guaranteed auto financing? This is a question that pops up first when you start exploring your options for purchasing a car. A guaranteed car loan is the only alternative where you don’t have to show your credit report, or simply put — a credit check is not a necessity, nor a requirement. But if they don’t need this information, how would they know if they could finance you or not?
Dealerships that offer guaranteed auto financing don’t take your credit score to determine if you can qualify for these loans or not. Instead, they use your income information and they require a down payment, as well as proof of your annual or monthly income in order to give you a car loan. The main difference between traditional financing and guaranteed financing are the rules. While traditional loans are based on credit checks, dealerships that offer guaranteed loans or in other words — bad credit loans, how they’re often been called, require income checks rather than credit checks.
Are there any benefits of guaranteed financing?
Not only will you be able to get a car, which wouldn’t be likely if your purchase or your financing was based on your credit rate, but you’ll get a chance to actually work on it in the future, by paying off your car through this type of financing.
This means that in-house financing or guaranteed financing is giving you a chance to improve your credit score. If your payments are up to date, you will both get your car and improve your rating. On the other hand, if you choose to work with dealerships that don’t want to report your payments to the credit bureaus, you won’t build your credit score rating but you’ll be able to get a vehicle, which was your main goal anyway.
Who chooses guaranteed car financing?
A guaranteed credit is a loan for all the people that need a car, but are not in the situation to get one. Whether you have a poor credit history, or your score is just not high enough to get traditional loans, you’ll be able to get financed by the dealerships that offer this type of financing. This is the case with people who have credit scores under 600 or even 500.
Keep in mind that every proof you can bring with you can help you close the deal, whether it’s your monthly or yearly income, proof that your income is steady, proof of your employment history or proof of your residence — all of this can contribute to getting a better deal. Other things that may positively affect your purchase are — a bigger amount of money for your down payment, which is important for both traditional and guaranteed car loans because the bigger the down payment — the lower your monthly payment; or having a co-signer with you since some dealerships offer better deals in this case.
What should I keep in mind?
In order to get a car loan, you have to provide the dealership with some kind of information. This is why it’s important to bring several documents about your employment, down payment etc. Get prepared, and you can get a guaranteed car loan pretty easily. However, there are several things you have to keep in mind. Guaranteed car loans are being given under special circumstances, such as high interest rates, shorter terms or bigger amounts of monthly payments.
Luckily, the same way they determine whether you are a risky customer and whether they should finance you or not — you can easily determine whether they are a reputable dealership such as Frank’s Auto Credit and whether they offer great deals, tailored to their clients’ needs. You can do that by inspecting the reviews online and getting pre-approved with your local bank, no matter your credit score, so that you know what you’re looking for. Also, make sure you can meet their requirements and that you’re fine with them. Finally, choose the car you like and enjoy your new ride!