Is it Possible to Make the Dealer Visit Less Stressful
The odds you will need to work with a dealer to help set up your auto loan especially if you have bad credit. The secret is to make it as easy as possible so let us help guide you to make it as easy as possible.
Do your homework online.
Almost every dealership’s website has an online credit application process which makes it simple to have everything pre-approved ahead of time. Now we still want you to double check with your bank or credit union and try to get approved with them first to give you more bargaining power. But if your bank has turned you down for bad credit the dealer is probably going to be your best option to get you going. You can let the dealer know what type of vehicle you are looking for but be flexible since sometimes the lenders guide them on the inventory in the approval process. You can always take a look at the dealer’s inventory and request a vehicle you would prefer.
Find a dealer who works with credit problems.
Not every dealer can provide bad credit loans. Most dealers who specialize in bad credit auto loans will advertise this and will understand how to work with the right lenders. The ideal situation is a dealer who has to establish relationships with multiple lenders so that you will have multiple approvals. Ideally, when you apply online or send a request, the dealer will have a specialist who can help make the process easy.
When you are emailing or working with the dealership getting the details put together, they will ask for what dealers call “stips”. This is short for stipulations the bank or lender will need to make the final approval on the loan. This is critical to have these details ready to prevent any hold ups on the sales or delivery process.
Some basic “stips” you will need is your pay stub and proof of residence. These are easy unless you don’t have a traditional type of job or self-employed. Basically, you will need to prove your income so bank statements usually work if you are self-employed and they may ask for up to 2 years of tax returns. Most dealers will not let you drive your new vehicle home until all of these items have been preapproved by the lenders so make sure you work with the dealer for what you will need.
Have your insurance in place.
You cannot take home your new to you car unless you have insurance in place. The dealer will want to see an insurance binder showing you are covered with full coverage. The binder will need to have the lender information provided to be acceptable. The good thing is with being able to work with insurance online this is much easier to do.
Have your entire down payment available.
In most cases for bad credit loans, you will need a down payment. You cannot use a credit card for down payment and make sure if you are using a debit card the dealer can run the card. Some small dealers don’t have the ability to swipe your card. Probably in most cases, the dealer will ask for cash to be used as the down payment. I have never seen cash bounce and when I had my store we had to stop accepting checks since we got burned often with checks not being good. Check with the dealer how they want to be paid and if it is cash make sure you get a receipt for the transaction, or it is noted on the purchase order.
Never ask the dealer to hold a check for you since there is a good chance it may be against the agreement the dealer has with his lender. Even though the dealer will say it is okay unless the check will be good for about 48 hours, I have seen customers lose a deal and have to give the car back because they used a hold check for the down payment. Do your part to make sure the deal is clean.
Make sure the deal is final before you drive away.
This dealer trick is not used as much anymore but before you leave the finance office to make sure the terms and approvals are complete before you leave. There was a time in the business the dealer would contract the deal with terms they thought they could get approved and bring you back in sometimes weeks later to tell you the deal has changed. This was call yo-yo deals, and it rarely was in the customer’s favor.
If a dealer is pushing you to take the car and work out the details later just let them know you will be back when the details are finalized. If you have been driving the car, thought everything is final, and the dealer calls you back in to change the deal you have the right to cancel the transaction. The dealer is required to return your down payment, and you are only liable for any damages on the car.
This is not the case if you lied to the dealer and the stips didn’t match what you presented on your application. Keep life simple don’t lie or try to deceive both the lender or the dealer it’s not worth it.