Getting a car loan doesn't have to be a nightmare, even with bad credit.

Tote the Note Dealership’s Dirty Secrets May Be Costing You $1000’s

last updated March 29, 2018 by

Lots of borrowers with bad credit are now turning to something known as tote the note dealerships to facilitate their auto financing needs. This is because, if a person has bad credit, they are likely to be turned down when trying to get traditional financing for a vehicle. In addition, there are those who believe that they cannot even qualify for subprime loans.

tote the note car dealerships.jpgOn the other hand, tote the note car lots are springing up every month, with offers specifically targeted at people with bad credit. Instead of using the services of third-party financers like credit unions or banks, these outfits, also referred to as ‘buy here pay here’ dealers, provide financing at the dealership.

What Is Tote The Note Financing?

This is a auto dealership which opts to hold the title to the vehicle as you make payments in installments to them. They assume the responsibility of a loan provider for consumers who may find it difficult to secure financing elsewhere. These in-house lenders who offer this unique form of financing can get around the need to use third party providers to offer tote the note offers direct from the dealership.

  • Unfortunately, few people really understand the interest rates charged by many tote the note dealers and end up paying much more than they expected to finance the purchase of a car.
  • A tote the note dealership understands that most of its customers have bad credit and take full advantage of this to offer financing for automobiles at a significantly higher rate of interest than traditional lenders would.

How Does Tote The Note Compare To Traditional Auto Financing?

One big difference between tote the note and traditional auto financing is the shopping experience for the consumer. Simply put, the two experiences are polar opposites. When you step into a traditional car lot, a salesperson will work with you to help you find the car that you like.

Generally, your budget, the interest rate to be paid, the terms of the lease and its finer details are not dealt with until you have identified your ideal ride. The process at a tote the note dealership is the exact opposite.

After you walk into a tote the note car dealership, you will first be taken to meet the finance manager before you get to look at the used cars on offer. The finance manager will work with you to find out how much you can afford to pay for a car each week.

This will be the information used to determine the vehicle you can afford to buy. After all the details of the financing have been considered and agreed upon, you will then be taken to view a selection of used cars that fit within your budget.

Approval Is Guaranteed

Most people with poor credit choose to get a vehicle from a tote the note dealer because they are almost guaranteed to drive away with a car, though they will need to pay a higher rate of interest. For tote the note dealers, your credit situation is irrelevant.

Your credit could be good, poor or bad, and you would still almost be sure that you would obtain financing for your car purchase.

In addition, a tote the note car lot will almost always skip the process of carrying out credit checks with guaranteed auto financing. All that this type of dealership is concerned with is proof of income and evidence of residency.

Because of their in-house financing model, these dealerships are taking on a tremendous amount of risk and want to know who their customers are, whether they are residents and if they can afford to pay for the vehicle.

Buy Here Pay Here Interest Rates

The major difference between traditional financing and tote the note dealers is the interest rate charged. In general a buy here pay here dealer will almost always send you home saddled with a higher interest rate on your car loan.

The fact that there is no checking of your credit score means that they can get people with bad credit to pay higher rates. The reason for the high interest rate is because these dealers take on significantly more risk than other car dealerships, which means they must be compensated for taking on the risk.

Because they do not carry out credit checks on their customers, those with bad credit can look for financing without fear of worsening their credit scores.

Vehicle Inventory

Yet another significant difference that tote the note dealers have when compared with other dealerships is in vehicle inventory. Most tote the note dealers have much smaller inventories of cars than normal used car dealerships.

  • In addition, the cars you will find at this type of dealer are often much older and carry much more mileage than you would usually find in a regular used car lot.
  • There is a good reason for this: Tote the note dealers will stock older cars with higher mileage because their clientele is more likely to pay for a car that would normally be passed up by someone looking for a quality vehicle.
  • A tote the note dealer is able to ask for more money for something that is valued a bit less, and quickly sell cars that would hardly find any takers in a traditional used car lot.

Disadvantages of Tote the Note

Like all things in life, there are a few disadvantages to dealing with tote the note car dealers that you need to be aware of. One of these is that the special financing used by tote the note loans cannot be used to rebuild bad credit, since they do not report to any credit bureaus.

GPS Tracking: Buy here pay here dealerships take on many risks when they do business with car buyers. To compensate for the additional risks, it is common practice for these dealerships to place GPS tracking units in their cars.

These devices make it easier for the dealers to find and repossess the vehicle if a buyer defaults on payment.
Automatic Shutoff: This is another common practice and tote the note dealers do it for much the same reason as they install GPS tracking; The car can be remotely disabled if the owner fails to remit their monthly payments.