If you have bad credit you should know the difference between rent to own auto loans and car loans with bad credit.
How applying online works
We have been in the bad credit car loan business long enough here at Auto Credit Express to realize that a large number of people with bad credit don’t understand the bad credit loan process and also don’t realize the options that they may have for car financing. Through our bad credit auto loan web site at www.autocreditexpress.com, we helped thousands of applicants reestablish their auto credit. The process can be started by filling out our auto loans for bad credit application. Unlike tote the note car dealers, dealers in our network offer second chance auto loans from lenders that report your payment history to the credit bureaus – allowing you to reestablish your car credit and raise your credit scores at the same time.
You should begin the process with some realistic expectations. For example, picking too much car can stretch your budget and, in the end, may even result in repossession. If this happens, the only remaining choice for most auto loans for bad credit buyers is a tote the note car dealer. It also means that rebuilding your car credit has to be put on hold for at least a year, since even bad credit lenders will only consider applicants with a repossession on their credit report that’s over a year old.
You also need to know the difference between special finance car loans and rent to own cars. Because even though both loans are made to bad credit borrowers, there are substantial differences between the two.
Rent to Own Cars
Rent to own car loans are loans taken out at a rent to own car lot. This type of loan usually consists of a down payment plus a fixed number of loan payments. The loan payments are normally due every week and are usually made in person at the lot you rented the vehicle from. Since you rent the car from the company that owns it, if you fall behind or have any other concerns regarding your rental agreement, it is the rental company that will make any decision regarding payment arrangements or ay other issues.
In addition, if you fail to follow the terms of the rental contract, it is the rental company that will repossess the car. The rental company also has the option of whether or not to report your rental payment history to the credit bureaus (many do not). The companies that offer these services generally rent only used cars. Very rarely do they rent new cars and for, the most part, rental companies are in no way affiliated with a franchised new car dealer.
Advantages: Vehicles available for rent are usually lower-priced used cars. Many people prefer to make payments on a weekly basis. Rental payments are made face to face so you know your agent personally and they know you personally. Many of these rental companies don’t bother with a credit check before renting you a car.
Disadvantages: Most rent to own companies do not report your rent payments to the credit bureaus. The cars offered for rent are usually older and have high mileage and, as a result, some of these vehicles are not that reliable. For most people, it is not convenient to visit the company every week to make a payment. Finally, rental terms usually range from 12 to 24 months, limiting the dollar amount of the rental agreement to lower-priced older cars.
Bad Credit Auto Loan
This type of loan, sometimes called a second chance car loan or a credit repair car loan, is usually available only thru a franchised new car dealer. The car that you are financing can be either a new car or a newer used car. Although the dealer sells you the car, the finance contract for the vehicle is sold to a lender. The finance contract normally consists of a down payment plus a fixed number of loan payments over a fixed period of time. The loan payments are made to the lender once a month, usually by mail or by electronic debit from your bank account.
Since the lender holds the finance contract to your car, any issues of payment or non-payment are made with the bank and not with the dealer. Most of these bad credit car loan lenders will also report your payments to the credit bureaus.
Advantages: Reporting your payment history to the credit bureaus is important if you are trying to reestablish your auto credit and eventually re-enter the prime loan market. The selection of vehicles from a new car dealer is greater. The vehicles are, generally, either new with no miles or newer used vehicles with lower miles. Loan terms start at 24 months and can extend to as many as 60 months, giving you a wider choice of vehicles to choose from.
Disadvantages: Not all franchise car dealerships work with these types of lenders and the level of experience and expertise in dealer special finance departments can vary widely. The selling price of the vehicles is usually higher, due to the fact that they are newer vehicles and have lower mileage. Interest rates are still high, due to the nature of the loans. Finally, any problems that you have with loan payments will be reflected in your credit report and will affect your FICO score.
As we see it
If you are interested in cheap transportation that doesn’t require a credit check, then the rent to own cars dealer wins. However, if you are seriously interested in repairing and re-establishing your auto credit, the bad credit auto loan is the better choice.
At Auto Credit Express, we have helped thousands of customers re-establish their credit while driving dependable new cars or newer used vehicles. To avoid the disappointment of not finding a dealer that offers a finance department that specializes in bad credit car loans, simply visit us on the web at www.autocreditexpress.com where, if you are serious about getting your credit back on track, you can begin a new chapter in your life now by filling out our bad credit car loan application.
Tags: auto credit, Auto Loans, bad credit, car credit, car loans, credit, credit auto, credit score, fico, FICO score, rent to own, repossession, tote the note
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