No Credit Check Car Dealers – How they work
If you have already messed up with your credit scores then be alert, do not take any wrong decision to spoil your credit further. To buy a new or used car, people with challenging credit history will receive many attractive offers for bad credit car loans. A word of advice, do not jump on every offer. Few dealers advertise as No Credit Check Car Dealers let's see what does it actually means. There are certain things that credit companies do not want you to know. Every time when you apply for financing, your credit history is checked. You lose five points from your credit score every time when your credit is checked. So, before applying for the bad credit loans you should do your research first. You must understand the different types of no credit check car loans available in the market. Very few dealers give their customers proper information about the credit check. All NO Credit Check offers are not always exactly what they say. You have to understand these types of loans first and then take any decision. Get more information about no credit check car dealers .
The main aim of taking this kind of loans is to rebuild your damaged credit that means a dealer should report to credit bureaus about your financial plans. That means they have to check your credit scores. No credit check car dealers mostly do in-house financing. They have their investors who are willing to take a risk by financing high-risk customers on a high interest rate margin. These dealers are of three types, they are
1. Franchised Dealers with a Regular Finance Department
A franchised dealer is one that sells new cars from a particular manufacturer or manufacturers and/or trade in cars. If your credit is bad, you may have to pay a down payment of 40% to 60% of the selling price of the vehicle.
2. Franchised Dealers with a Special Finance Department
These are those franchised dealers that sell new and used cars. The difference is, these dealers also have a department that works with customers with poor credit. Your down payment will normally be between 10% and 20% of the selling price. They will report your payment history to the credit bureaus (Equifax, Experian, and the TransUnion).
3. Buy Here Pay Here Dealers with In-House Financing
The easiest way to get a bad credit car loan with no credit check is through a Buy Here Pay Here Dealer. These dealers don’t fund their loans through a finance company. Instead, they finance in-house but they will ask for a down payment that almost covers their cost of the vehicle. Your payments actually go towards their profit on the car. And, they will not report your financial plan to the credit bureaus.
If, all you want, a cheap used car with no credit check, then buy at buy here pay here dealer or from No Credit Check Car Dealers, otherwise build your credit history first and then apply for a traditional car loan. Though it is a lengthy procedure, but more secured one.