Types of Auto Lenders
Banks and credit unions are probably the most commonly used auto lenders. People who are buying a car usually want to be financed through a bank they already have an account at, but sometimes other auto lenders offer lower interest rates. Car dealerships often have a list of lenders that they work with on a regular basis and typically send the customer’s information to several different lenders to ensure that the customer is approved and the interest rate is competitive.
Vehicle manufacturers sometimes offer special rates or discounts to people who purchase certain makes and models of cars and trucks. Sometimes they even offer no money down and 0% financing for a specified period of time to customers with excellent credit scores. Consumers often take advantage of the deals these auto lenders offer and trade in their current vehicle to buy a brand new one. This helps the auto-makers sell more new cars at a time when most people are not buying new due to the depressed economy.
People with fair or poor credit sometimes buy cars on payments as a way to improve their credit score. Poor credit auto lenders are usually pretty lenient and almost anyone can be approved for some type of auto loan. There are many independent companies who lend people money to buy vehicles, and they are usually a good option for people who cannot be approved for a traditional bank loan due to their credit score. These loans typically offer loans at higher interest rates because they take on risk by approving people with poor credit scores.
Short term loans are offered by some used car dealers without a credit check. This is a great auto lending option for people with very poor credit who cannot get a car any other way. The cars are typically older and inexpensive, but they will work for someone who needs a car. These dealerships usually use advertising slogans like “Buy Here, Pay Here” and “No Credit Check”.