Comments on: Are No-Credit Auto Loans No Problem?

Question: Are No-Credit Auto Loans No Problem?

lekvar — Sat, 08 Nov 2008 12:10:26 -0800

Online auto loans; too good to be true?

My credit is non-existant, but I need to get a new(er) car. I have a good amount of money for a down payment, but no reputable bank will touch me. However, I just found a number of online auto loan lenders who specialize in bad/no credit/bankruptcy loans.

Obviously, there's no such thing as a free lunch. Just as obviously, I'll likely be hit with a usurious interest rate. I'm OK with that for the time being, but I feel like there's something I'm overlooking.

Any MeFites have experience in this area? Are they a scam or a godsend? Any hidden weirdness I should look out for? Any specific recommendations?

Hard facts and anecdotes are equally welcome.

By: notyou

notyou — Sat, 08 Nov 2008 12:15:09 -0800

I used a CapitalOneAuto "Blank Check" loan to purchase a car a couple years ago. Got a great rate and haven't had a problem.

By: MattD

MattD — Sat, 08 Nov 2008 13:00:56 -0800

Things to be aware of: (1) prepayment penalties are common; if you think you can take a high rate now and refinance or pay off the note to cut the pain, that may not be so. (2) the business model for some (but not all) car lenders to people with poor credit involves aggressive collection efforts -- the calls start if you're a day late, and repossession comes quickly thereafter.

By: MzB

MzB — Sat, 08 Nov 2008 13:36:09 -0800

Always know your credit score before buying something on credit.

By: Mr_Chips

Mr_Chips — Sat, 08 Nov 2008 14:22:00 -0800

Capital One does a good job. you can prepay with no problem, and anytime you make a payment of $2000 or more they will reammortize ( i know i spelled that wrong) the loan

By: kindall

kindall — Sat, 08 Nov 2008 20:38:00 -0800

If they are backed by an actual bank, I would say your risk is relatively low. But really, with any lender, bad things tend to happen only if you start missing payments. If the proposed payment is within your budget and you have shopped around to make sure you're getting the best interest rate you can, I'd say go for it.

Do not worry about multiple credit inquiries affecting your credit score while you're rate shopping. The algorithms that calculate your score take this into account. So there is no problem applying at the "big" sites like eLoan and Capital One first, and then trying other lenders if your credit isn't good enough to get approved there. My guess is that Capital One will approve you, although perhaps not for enough to buy a brand-new car. I think in your situation you should be looking at used cars anyway.

By: Elminster24

Elminster24 — Sat, 08 Nov 2008 22:49:34 -0800

One thing to look out for with finding a lender online is that the loan industry is incredibly saturated with affiliate marketers right now. These people get paid a hefty commission whenever you obtain a loan after clicking their link.

Things to look out for include redirects off of their site to a lenders where your URL has some weird ID at the end of it (this is their affiliate ID). There's no real harm in using an affiliate's link, it doesn't cost you anything, however you need to realize they have a monetary incentive for directing you towards one particular lend and may saying anything to get you to go through with it, even if it is false or misleading.

Also, affiliates are all over creating fake review sites, so beware of that.

By: lekvar

lekvar — Tue, 11 Nov 2008 14:38:35 -0800

Thanks for all the info, folks.