Buy Here Pay Here Memphis, TN

The crash of the economy was largely due to sub-prime mortgage loans. In addition to approving loans for people with bad credit, many appraisers were stretching the value of home to meet the value requested by the mortgage broker. Unlike homes, which are unique, the universe of used cars contains a finite amount of year, make, model, and mileage ranges. Auto loan finance lenders rely on published vehicle valuation guides to determine the amount of money they will lend for a specific used car and credit profile. These published vehicle valuations contain several values, the two most important being the retail value and the wholesale or trade-in value. The used cars retail value is based on retail historical sales figures broken down by regions of the country. Used car trade-in values are calculated from auto dealer auction data. For used car financing and used car leasing, most auto lenders base the amount they will lend on the used car trade-in or wholesale value, which makes since. If the auto lender has to repossess the used car they want to make sure they can get their money out of it. Once they have a used cars value they determine a Loan to Value (LTV) amount based on a persons credit score, and other risk factors like job time, disposable income, and how long they have lived in the area. For simplicity, the following LTV amounts are based on credit score alone.

LTV	Credit Score
150%	750
140%	720
130%	700
120%	650
110%	600
100%	550
90%	500
80%	400

As you can see, auto lenders are willing to loan money to buy a car to just about anyone. There are many guaranteed auto financing programs. Keep in mind, however, that the guaranteed loan amount may not be enough to buy a car you want to own. In the above example, if you wanted to buy a car with bad credit that has a sales price of $10,000, a trade-in value of $9,000, and an out the door sales price of $10,800, including tax and state fees, with a 400 credit score, the lender would require you to come up with $3,600 cash down to complete the transaction; they would lend 80% of the $9,000, or $7,200. To combat the requirement for more money down, many car lots have developed on the lot auto financing programs, the most popular are buy here pay here, rent to own, and lease to own auto financing. With these lending programs the car dealer determines the approval amount, not the lender; and since they get to meet you before they lend you the money, they have a leg up on traditional lenders.