Why people with bad credit normally will not qualify for a sign and drive program
Understanding car loans
Auto loan applicants with low credit scores sometimes ask if they will qualify for a sign and drive auto loan.
We know the answer to this and many other questions as weve spent the last twenty years helping people with car credit issues here at Auto Credit Express. Its also why our website addresses such topics as repossession as well as the issue at hand, sign and drive car loans.
Sign and drive
Sign and drive is a car finance program, but in this case it refers to type of new car leasing. With sign and drive, qualified buyers can begin leasing a vehicle by paying only the taxes, title and license fees. Under most lease programs, buyers are also required to make the first monthly payment plus a security deposit as part of the upfront costs.
Sign and drive with low credit scores
Practically all subprime auto loans are for buying, not leasing, a car. Not only is leasing rarely available to credit-challenged customers, the sign and drive lease option is typically available only to lease customers with the best credit scores. So its easy to see that customers with credit issues will not qualify for this type of new car finance program.
Down payment issues
One reason applicants with credit problems ask about sign and drive program is because they dont have enough of a down payment. The fact is, nearly all subprime auto lenders require a down payment in the form of cash or real trade equity. This is done to increase the odds that a borrower will make regular, timely loan payments.
Look at it from the lenders point of view: with little or no money invested especially during the early part of a loan when a car is worth less than the loan balance, its much easier for a buyer to just walk away from a loan. But with their money invested in the car, its more likely that same person would continue to make payments. Due to this fact, most lenders require a down payment of at least ten percent or $1,000, whichever is less.
Taking the first step
Dont be discouraged if youre unable to qualify for a sign and drive lease. While the program is not an option for buyers with bad credit, there is something that can be done.
By initially taking out an auto loan with a high-risk lender and making payments on time, you can establish your auto credit, raise your FICO scores and eventually qualify for one of those sign and drive programs.
In fact, at Auto Credit Express our specialty is placing applicants that have had credit difficulties with dealers that can offer them their best chance at approved auto loans.
So if youre serious about getting your car credit back on track, you can begin by filling out our online auto loans application now.
Tags: Bad Credit, sign and drive
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