Your credit score is a very important tool when making a major purchase. Purchasing a car is the single most expensive purchase after a home for most Americans. Therefore, choosing what make and model, how much to spend, and whom to buy from becomes important. Your current credit score and your future credit score can be affected by how much you borrow and for how long, what auto lenders you finance with, and your current ability and future ability to pay off the loan. If you run into any trouble repaying this loan or any loan, there will be consequences that will impact your credit history. If you choose Drivetime as your auto lender how will this affect your credit history if you are unable to make a payment? Does DriveTime Report to Credit Bureaus? First, let’s understand what DriveTime is and how it can help you or hurt you by reporting to the credit bureaus.
What Is Drivetime?
DriveTime Automotive Group Inc. is an American used car retailer and finance company. It sells and finances cars to customers in the United States. It was formerly known as Ugly Duckling prior to 2002. Drivetime has about 145 locations in the U.S. with about 3,800 employees. DriveTime is a good option for people who have no credit or a very low credit score. They offer a 5-day vehicle return policy and a 30-day/1,500 limited warranty. This is their exclusive in-house financing model. However, how does one get approval to purchase a car?
You are watching: Does Drivetime Do 5 Year Financing
When creating your customized approval Drivetime will access your credit report from all three major credit card bureaus: Experian, Trans Union, and Equifax for a credit check. However, they will also verify your income via pay stubs, bank statements, and/or employer verification. They will look at your debt-to-income ratio, and how long you have been at your current residence, or working for your current employer. Finally, they will review the size of the down payment you are able to provide. Therefore, your credit rating is not the only factor when approving a loan.
Once approved the average term of the loan is 69 monthly payments with an APR (interest rate) of either 6% or 17.5%, based on October 2021 data. Disclaimer: The range of the APR is subject to change based on your credit score and other financial factors. You can borrow from $7,000 to $35,000.
Similar Auto Lenders
Is DriveTime your best option for auto lenders? Used cars can be purchased at any auto dealership. However, Drivetime’s competitors are CarMax, America’s Car-Mart, Carvana, and AutoNation.
Carvana is a better option for convenience when making a purchase and trades. CarMax is best when you want to test drive the vehicle before making your final purchasing decision. America’s Car-Mart allows you to shop, purchase, finance, and make your payments all at once. Finally, AutoNation is a no-haggle, one-price approach to purchasing a car. Just make sure you do your research so that you get a fair price.
Financial State
Whether you are purchasing a car out of necessity or looking to upgrade your vehicle, your current financial situation should dictate your purchase. Create or review your budget to determine how much you can afford monthly, how much you can put down on a car, or how much car you can afford to pay for out of savings. Everyone cannot afford to purchase a new car, however, if you have the means then you should purchase what you want. Next, review your other financial obligations such as credit cards, personal loans, and student loans.
Credit History
What is your current credit history? Most free apps such as Credit Karma or Credit Sesame will give you an idea of your current credit history. However, your mobile banking or credit union app should be able to supply this information also. A low credit score or a poor credit score may not necessarily be an obstacle to purchasing a car, but it will increase the cost of financing. It is always a good idea to check your credit report for any inaccurate information on active finance accounts. This will prevent you from experiencing a poor credit score versus a good credit score. . Hence, this exercise could help you obtain a lower interest rate for good payment history. You can order a free credit report from each of the bureaus annually.
In addition to checking your basic FICO score to determine how reliable you are in paying back debts, a car dealer may check your FICO Auto Score. They both use different credit scoring models. The base FICO Score ranges from 300 to 850, but the base FICO auto scores range from 250 to 900. A good FICO auto score to obtain a car loan is between 661 and 850 per ToyotaDirect.com.
Reliable Employment
See more : How Do Buy Here Pay Here Dealers Offer Their Financing
Having reliable employment that will ensure you are receiving a steady income does not have to be more than three months to obtain auto financing. Unlike purchasing a home that needs a two-year history of consistent work in the same line of work or at the same job. Hence, financing a car is much easier than purchasing a home.
Procuring The Loan
You will need to provide all this personal information and financial information, including your social security number and date of birth once you have settled on a vehicle to the DriveTime Automotive Group. This information will be used to access your credit rating to determine the interest you will pay on the loan amount. However, you can procure your own financing from your bank, credit union, subprime lenders, or any other financial institution.
DriveTime’s loan servicing company is Bridgecrest Acceptance Corporation they provide subprime auto loans and standard auto loans. DriveTime will approve or decline a car loan application within one hour and fund the auto loan within the business day of approval. This should be the same for any other financial institution you wish to procure a loan with.
However, DriveTime does charge an auto loan origination fee and there is a prepayment fee if you pay your loan early. If you plan to pay your loan off early like I did this may cancel any interest savings, you obtained from a lower rate. Therefore, I would consider different lenders in the loan search.
DriveTime may also require a large downpayment depending on the type of car you select. This downpayment must be paid before the car can be driven off the lot.
Finally, DriveTime will charge a late payment fee of up to $5 if you are 15 days late.
New Car Vs. Used
Prior to visiting your local car dealer, determine what type of car purchase you desire. You should exercise due diligence whether you are purchasing a new car or a used car. Therefore, you should also factor in if you should purchase a new car with a loan or lease the vehicle. Research as much as possible all vehicle data, for new cars check out independent consumer reporting data. For used cars check out the vehicle history for accidents, cost of maintenance, and the typical cost of repairs. For all cars check for recalls, if they offer great customer service, cost of insurance, and good gas mileage. With the cost of gas, you want to know in advance if the car requires premium or regular gas. Hence, all this research will enable you to purchase a quality vehicle that meets your needs and budget.
Finally, what type of car are you looking to buy? Is it an affordable economy car or your dream car filled with all the luxuries and upgrades? Whether the car is used or new high-end cars in most cases have bigger engines and require premium gas. They also have higher maintenance and repair costs. Therefore, all this must be factored into your budget in addition to your car payment. Therefore, I would set up a maintenance/repair sinking fund.
If you do your due diligence, you will arrive at the dealership prepared to deal with all the pressure tactics such as “This is the last week for the sale price”, “only participating dealer sales”, or bad car loans that will bust your budget.
Does DriveTime Report To Credit Bureaus
Yes, DriveTime via Bridgecrest Credit Company (formerly known as DT Acceptance Corp) will report all activity to the three major credit bureaus: Experian, Equifax, and Transunion. They will report on-time payments as well as late payments. The good news is that with the additional credit mix of a car loan coupled with credit cards and other loans, this type of loan can improve your credit score. Credit mix counts for 10% of your score. Payment History (35%) and Credit Utilization rate (30%) are the heavy hitters but 10% is still worth improving. Maintaining a mix of credit demonstrates that you can handle multiple types of loans per Experian. It can help you reach an excellent credit score and a better interest rate.
See more : Can A Student Finance A Car
Should you fall behind on your payments? Bridgecrest will report this to all three credit bureaus, and this will have a negative impact on your credit score. As noted above payment history accounts for 35% of your credit score. Therefore, on-time payments are the most important factor in reaching an excellent credit score. The best way to avoid late payments and fees is to set up auto-payment through your bank. The payment amount will be deducted from your checking account on the due date. Some financial institutions will offer discounts for direct withdrawals. Review the payment options with your lender.
Consumer Protection
You should know your rights when dealing with late payments. The Consumer Financial Protection Bureau is a government agency that sets guidelines to make sure you are treated fairly by banks, lenders, and other financial institutions. You can find answers to questions you have about credit reports, debt collection, mortgages, credit cards, and any other money topics. Visit their website – https://www.consumerfinance.gov/
Steps For Procuring An Auto Loan
- Create a budget
- Review your credit score
- Determine what you can afford
- Research the type of car you want to buy
- Research the type of financing available
- Understand the application process
- Be prepared to provide personal and financial information
- Make sure the down payment and loan payments fits your budget
- DriveTime and most financial institutions will report your payment history to the credit bureaus
- Set up auto payments to avoid late fees and negative remarks on your credit report
Please be advised that this is solely for informational purposes and not financial advice. I do not endorse any of the companies mentioned above.
Additional Reading For You:
Debt-Free is the New Rich
How To Manage Credit Card Debt
What Hurts Your Credit Score The Most
Financial Literacy For Beginners – 5 Basic Components
The rich rules over the poor, and the borrower is the slave of the lender.
Proverbs 22:7 (ESV)
Source: https://tholansonnha.com
Category: Finance
