Having trouble getting approved for an auto loan because of your credit history? You may be considering a dealer’s note tote. We find out how they work, what to expect, and if this might be the right choice for your credit situation.
What is a Tote the Note dealer?
A tote ticket vendor is another term for a lot of used cars buy here pay here (BHPH). These dealers are best known for their second chance financing options for borrowers with bad credit. This is because these dealerships generally do not check your credit when you apply for financing.
If you have enough income, a down payment, and enough room in your budget, it can mean auto loan approval, regardless of your credit score or history. For many borrowers whose credit reports are badly affected, such as a recent repossession, bankruptcy, or defaults, a dealership tote could be the solution to getting into a vehicle.
Most traditional lenders don’t consider a borrower with a car repossession less than a year old, terminated bankruptcies, or multiple delinquent accounts. However, tote the note dealers usually don’t check your credit at all when you apply, so your negative scores likely won’t influence their decision during the approval process. If your credit is worse for wear and tear, a tote dealership might be one of the best options you have for getting your next car loan.
Why don’t they check my credit?
Tote the note that dealers have what is called internal financing. Simply put, the dealer is your lender. Instead of going to your bank and getting approved for financing, you step into a tote, choose a vehicle, and go through the financing process, all in one place.
Since the dealership doesn’t have to rely on third-party lenders, they don’t have to check your credit. Proving that you can afford the car and coming with a down payment can usually get you into a vehicle quite quickly and help you skip the credit check altogether.
However, tote ticket dealers have some shortcomings, and they may not be your only option.
3 Considerations for Bad Credit Borrowers
First, these dealerships may not offer the option of credit repair. Auto loans are often used by many borrowers to build up their credit with a good repayment history. However, auto loans made by dealerships with in-house financing may not be reported to the credit bureaus. This means that, according to the credit bureaus, your auto loan does not exist and your on-time payments cannot help build or repair credit. Some tote dealers report their loans, but if you’re concerned about credit repair and vehicle access, be sure to ask them if they do.
Second, tote bags usually ticket sellers require large down payments, which could be seen as the trade-off for skipping credit. Sometimes the dealership charges around 20% or more of the car’s selling price up front.
Third, the payment schedule for a tote ticket dealership may not be the best for your situation. Some house finance dealers require that you make all payments in person. Others require you to make weekly or bi-weekly payments. Before signing the dotted line for your tote vehicle, be sure to inquire about their payment options.
Other car buying options
In addition to the ticket dealers, there are also subprime lenders for bad credit borrowers. Subprime lenders are third party lenders and they check your credit, but they also look beyond. These lenders specialize in helping borrowers with unique credit situations.
Subprime lenders are registered with dealerships that have special financial services. You don’t meet with the lender, but you work with the dealership’s special finance director throughout the subprime approval process.
These bad credit lenders look at your income, life stability, work history, and more to get a better picture of you as a borrower. They require a down payment, usually at least 10% of the car’s selling price or $ 1,000. If you are approved for financing based on your information, you choose a vehicle with the dealership that matches the amount for which you are eligible.
One major advantage of financing through a subprime lender is credit repair. Subprime auto loans are reported to the credit bureaus, so you can improve your credit score with on-time payments.
If you continually go through lenders who don’t report your payments, it can be very difficult to break out of the bad credit cycle. A better credit score means more opportunities for future credit and a better chance of benefiting from lower interest rates later, which saves you money.
Dealers for bad credit borrowers
When your credit is low, you can also feel low. But you still have auto loan options if you know where to start, and you can start right here, now, with Auto Express Credit.
Over the years, we have created a nationwide network of bad credit dealers with loan options for borrowers with unique credit situations, including ticket dealers. If you’re ready to take the plunge and be matched with a dealer in your area, complete our free form auto loan application form.