It can be more difficult to get approved for vehicle financing if you have less than perfect credit. However, the benefits of an auto loan when you have bad credit are numerous.
Many people with credit issues may not want to apply for an auto loan because they either think that they will be denied or want to avoid debt. Some may think that buying a vehicle with cash from a private seller is the better way to go. But if you're considering doing this, you may want to think again.
While paying cash for a vehicle from a private seller is generally less expensive, there are downsides involved that can be risky for a person with poor credit. Namely, you won't have as much legal protection, your options will be more limited, and you won't get a chance to improve your credit.
You may soon find that applying for a subprime auto loan will be more helpful. These loans are designed for people with imperfect credit, so don't think your credit issues will always keep you from getting approved. Let's take a look at some of the benefits these loans offer over buying a car with cash from a private seller.
The Benefits of an Auto Loan
Here are some of the top reasons to use an auto loan when you have bad credit.
The Ability to Get a Newer, Reliable Vehicle
If you go the private seller route, your options will be limited. And if you plan on using cash, you will likely only be able to afford an older used car. With a subprime auto loan, you will be able to take advantage of a dealership's larger selection of vehicles. And, financing it will allow you to afford a new or recent model used vehicle. Newer cars are safer, offer the latest features and technology, and are built to last longer.
If you finance through a dealership, you will be much better protected by the law. There is a lot of legislation protecting consumers who buy from registered dealerships. And these dealerships have to adhere to strict procedures set forth by these laws. For example, they are required to disclose a vehicle's history, true mileage and more. But sales by private sellers are not governed by these same laws. You could find yourself out of luck with limited legal options if the vehicle you bought privately turns out to have problems.
Shopping is Easier, Faster, and More Convenient
A private sale requires coordination between you and the seller. You can only check out the vehicle, test drive it or purchase it at times and places that work for the both of you. Not to mention that you have to take care of the paperwork involved yourselves. With an auto loan, you can head to the dealership whenever it's convenient for you.
And let's not forget about the number one benefit: getting a chance to improve your credit!
Rebuilding Credit with Your Auto Loan
A private sale with cash will do nothing to help you improve your credit. A subprime auto loan does. You stand to improve your credit score with every loan payment that you make on time.
Ideally, you will have significantly improved your credit score by the time you have paid off the loan. This makes it easier to get approved for financing, at a better interest rate, when you need your next car.
Just be sure that, before committing to an auto loan, your lender will be reporting your loan and payments to the credit bureaus. Then you can get to work on establishing a positive payment history and improve that rating.
At Canada Auto Loan, we help people with imperfect credit quickly and easily find auto financing. When you apply with us, we'll connect you with a dealership in your area that will give you a good chance for an approval. Plus, our affiliate partners work with lenders that report your loan and payments to the credit bureaus.
The best part is that our service is free, fast, and doesn't put you under any obligation. You have nothing to lose. Go ahead and fill out our simple and secure online application to get the process started today.