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Buying a car involves plenty of decisions. Understanding how to finance your purchase can add another intimidating layer. Between credit requirements, down payments and different financing options, it can be difficult to know what applies to your situation.
Some common assumptions about used car financing also makes the process seem more limiting or complicated than it needs to be. When you know how financing works and what options may be available, you’ll be able to ask the right questions and make decisions with greater confidence.
Here are five common misconceptions about financing a car and what you should know as you prepare for your next vehicle purchase.
1. “I Need a Perfect Credit Score to Finance a Car”
Your credit history can affect your financing options, but less-than-perfect credit doesn’t necessarily mean buying a used car is out of reach. Different financing options may be available depending on your individual circumstances, even if you have had difficulty qualifying through traditional lenders.
At Byrider, we work with customers from a variety of financial backgrounds, including those who have experienced credit challenges or have little credit history. Our Buy Here Pay Here model allows us to work directly with customers to explore financing options based on their individual circumstances.
2. “Every Car Loan Has to Come From a Bank”
Traditional banks and third-party lenders aren’t the only ways to finance a vehicle. Buy Here Pay Here car dealerships offer another approach by handling the financing process directly, allowing customers to purchase and finance their vehicle through the dealership.
Byrider’s Buy Here Pay Here approach gives customers another financing option when a traditional loan may not fit their circumstances. By working directly with our team, customers can discuss their individual situation, understand their financing terms, and ask questions throughout the process.
3. “I Need a Huge Down Payment Before I Can Buy”
There isn’t one down payment amount that applies to every car buyer. For example, NerdWallet recommends aiming for at least 10% down when purchasing a used car, but that figure is a general guideline rather than a universal requirement. The amount you actually need can vary based on your financing arrangement and individual circumstances.
When purchasing a vehicle at Byrider, some buyers can qualify for financing with as little as $0 down. Rather than assuming a particular amount will be required, talk with your local Byrider team about the down payment options that may be available based on your individual situation.
4. “My Payment Options Will Be the Same Everywhere”
How and when you make your car payments can vary depending on your financing arrangement. Before signing, it can help to ask questions such as:
- How often will my payments be due?
- What payment methods are available?
- Can the payment schedule align with when I receive my income?
- Who should I contact if I have a question about my account?
Understanding these details ahead of time can make it easier to plan for your payments as part of your regular budget. Byrider offers customers multiple ways to make payments and works with them to establish a payment schedule that fits their individual circumstances.
5. “Car Payments Don’t Affect My Credit History”
Your payment activity may play a role in your credit history when it is reported to credit bureaus. Knowing whether a lender reports your payments, and when they are due, can help you better understand how your auto financing fits into your broader financial picture.
Credit reporting is part of Byrider’s approach to supporting customers throughout their financing journey. Byrider reports payment activity, so customers receive credit for their payment history. While financing a vehicle does not guarantee a particular change to your credit score, understanding how your payments are reported can help you make informed decisions as you work toward your broader financial goals.
Have more questions about buying or financing a car? Find your local Byrider to talk with our team about your vehicle and financing options.