An organization like Consumer Portfolio Services Inc provides indirect vehicle financing for people with low credit scores. This is beneficial for both consumers and dealerships selling cars, sport utility vehicles and pickup trucks.
Advantages for Consumers
These individuals often cannot finance a car purchase without the services of this type of company. A financing organization like this one is able to overlook bankruptcy filings and foreclosures if other factors on the application indicate the customer is a good risk. This is a step toward making a brand new start after someone has dealt with serious financial problems in recent years.
The service is also convenient because customers can view their invoices on the website and make payments there as well. They have continuous access to their account, which makes it easier to manage. They see the amount due and the total still owed, and they have the option of paying extra to bring the outstanding balance down.
Advantages for Car Dealerships
Auto dealers benefit because they are able to make more sales. Large numbers of individuals deal with problematic credit ratings, often an aftereffect of the Great Recession. Many people also do not have enough cash in savings to pay for a good used vehicle without a financing arrangement.
Interest rates for these loans tend to be higher than the norm because the financing company is taking on a greater risk than usual. Although the borrower may not like to think about it, people with problematic credit histories are statistically more likely to fall behind on payments. But in addition to being able to finance a car, this individual may be able to refinance at a lower rate within a year or two after making all payments as scheduled and proving his or her creditworthiness.
For these reasons, it’s crucial for the borrower to only agree to a payment arrangement that easily fits within the budget. If this person has never devised a budget before, doing so before taking on a car payment is strongly recommended. Afterward, paying the invoice on time each month will help rebuild the person’s credit score to a more satisfactory number.