DriveTime is a sequence of automobile dealerships that use the purchase right here, pay right here mannequin. Primarily, the dealership funds the vehicles it sells straight. The method is mostly thought of by people with poor credit score who battle to safe financing by conventional means, equivalent to by way of a financial institution or credit score union. Whereas a lot of these companies could make automobile possession attainable for these with a bad credit score, there are normally some vital catches to contemplate. With that in thoughts, listed here are ten scary info about DriveTime.
1. Extremely Excessive Curiosity Charges
Whereas DriveTime advertises rates of interest as little as 7.9 p.c, that isn’t what the everyday DriveTime purchaser receives. As a substitute, the “common deal” listed on the DriveTime web site has an rate of interest of 22.6 p.c (based mostly on knowledge between January 2023 and April 2023). Since that’s a mean deal, whereas some prospects do get a greater charge, a big variety of DriveTime patrons find yourself with a better one.
One of many causes for the high-interest charge is that DriveTime primarily targets subprime debtors. Nonetheless, subprime is assessed as having a credit score rating between 580 and 619, with deep subprime being anybody with a rating beneath 580. Based mostly on knowledge from Experian, the common deal supplied by DriveTime has a better rate of interest than the general common for subprime and deep subprime auto mortgage prospects, which are available at 18.55 p.c and 21.32 p.c, respectively. In the end, meaning DriveTime rates of interest are probably greater than the common charge for individuals with a bad credit score.
It’s additionally important to notice that DriveTime can cost an rate of interest as excessive as the utmost charge allowed by your state. For some states, the cap is round 36 p.c, however a number of states don’t have any higher restrict. Because of this, you’ll must examine your native usury legal guidelines to find out the very best allowed charge in your space simply to be sure to’re conscious, significantly in case you have a bad credit score.
Moreover, DriveTime will permit you to safe your personal auto mortgage if you wish to buy from certainly one of its dealerships. In lots of instances, that’s value contemplating, as you could get extra favorable phrases.
2. Very Quick Restricted Guarantee
While you purchase a automobile from DriveTime, you could discover it engaging that the seller affords a restricted guarantee on its autos. Nonetheless, the restricted guarantee solely lasts as much as 30 days or 1,500 miles, whichever comes first. Moreover, a restricted guarantee doesn’t cowl each part of a car, so some issues can be your duty to repair no matter once they happen.
Now, native legal guidelines could give you safety in opposition to main defects, problems with security, or different issues. Nonetheless, getting a dealership to offer companies associated to the implied guarantee sometimes lined in these guidelines can require effort, no matter the place you purchase a automobile. Nonetheless, for the reason that guarantee equipped by DriveTime is so temporary, when you expertise an issue past that interval, you’ll must combat for the implied guarantee.
3. DriveTime Might Observe Your Automobile
While you purchase a automobile from DriveTime, it comes geared up with a GPS gadget. In some restricted circumstances, DriveTime could use the GPS tracker to find out the situation of your car. One such scenario might happen when you fail to make your funds, because the GPS knowledge helps the corporate get better the automobile.
Earlier than shopping for a automobile from DriveTime, it’s important to grasp when the corporate could use the gadget. Moreover, guaranteeing it’s eliminated after the acquisition is full is doubtlessly clever.
4. No-Haggle Pricing Limits Negotiating
Whereas no-haggle pricing could sound like a optimistic – and it definitely could be in some conditions – it does imply that your capability to barter is doubtlessly restricted. Whether or not that’s problematic is determined by whether or not the automobile you’re contemplating is being offered at an inexpensive value. Fortuitously, on-line instruments may also help you estimate the worth of a car based mostly on its make, mannequin, situation, mileage, and different components, permitting you to see if the value listed by DriveTime is honest.
5. You’ll Probably Want a Down Cost
Placing a down cost on a automobile is usually clever, because it helps you to restrict how a lot you borrow to cut back the quantity you’ll pay in curiosity and keep away from being underwater in your mortgage. Nonetheless, when you’re quick on money, the thought of a $0 down cost is engaging. The problem is that solely 10 p.c of DriveTime prospects who use the corporate’s financing choices are eligible for a $0 down cost, which means 90 p.c should make a down cost.
How a lot the down cost is essentially is determined by your credit score rating, and something however a wonderful rating sometimes means having to place cash down. Moreover, the value of the car performs a job.
6. Prolonged Guarantee Cowl Is Expensive
Whereas DriveTime affords a short restricted guarantee on any car, if you wish to prolong the protection, which will value a fairly penny. Exactly how a lot does differ relying on the automobile concerned and the phrases chosen. Nonetheless, some prospects have been charged practically half the price of shopping for the car.
Some prospects additionally expertise points when making an attempt to make use of the prolonged guarantee they buy, even when the problems seem to be they need to be lined. Contemplating the value, that isn’t what most individuals would anticipate.
7. No Loaner Autos for Coated Repairs
In case your automobile wants a restore that’s lined by the guarantee, DriveTime doesn’t have loaner autos accessible to maintain you on the highway. Moreover, the rental reimbursement quantity supplied – as much as $25.99 per eight hours of labor required to finish the restore – isn’t normally sufficient to cowl the price of a rental. Whereas the precise value varies based mostly on the car chosen and the individual’s location, rental vehicles can run between $50 and $100 a day or extra, so the reimbursement could cowl as little as half of the associated fee.
8. Obtainable Automobiles Can Have Excessive Mileage
Whereas DriveTime does promote a wide range of autos, many are close to or over the excessive mileage level. Usually, a automobile is excessive mileage as soon as it hits about 100,000 miles, and that’s normally a time when higher-cost repairs and upkeep are essential to maintain the car in fine condition.
Now, many trendy vehicles have loads of life, even when they’re categorised as excessive mileage. Nonetheless, that’s doubtlessly depending on how properly the car was cared for beforehand. Since upkeep information will not be accessible by DriveTime – primarily relying on whether or not they have been supplied when DriveTime acquired the automobile – there’s no assure it was properly maintained beforehand. Because of this, if the mileage is excessive, points could start growing shortly, which might make the price of possession go up dramatically in comparatively quick order.
9. A whole lot of Complaints
Whereas any firm can expertise its fair proportion of complaints, there are a whole lot of them recorded on the Higher Enterprise Bureau web site alone. A lot of them focus on related points, equivalent to a automobile experiencing a mechanical situation inside a comparatively quick interval after the car was bought. Complaints about challenges when getting repairs are additionally widespread, together with when making an attempt to make use of the guarantee.
Now, DriveTime additionally has optimistic critiques, together with many listed on Trustpilot. Nonetheless, it’s important to grasp that each good and unhealthy experiences have occurred, guaranteeing you make the absolute best alternative when you’re contemplating a car buy from DriveTime.
10. No Prolonged Take a look at Drive
Some individuals want to take prolonged take a look at drives to get a greater really feel for a car or to take a automobile they’re contemplating to a trusted mechanic. If you happen to’re shopping for from DriveTime, that’s not an possibility. Whereas a standard take a look at drive is a part of the equation, if you need your personal mechanic to look at the car, they’ll want to come back to the dealership with you.
Moreover, most DriveTime dealerships don’t have their very own service facilities on-site. Meaning they’ll’t put the car on a raise to make the underside of the automobile seen for an inspection. Because of this, what you or your mechanic can examine is restricted, so even an skilled mechanic could not be capable to spot each potential situation when you carry them alongside.
Are you aware of another scary info about DriveTime? Have you ever tried DriveTime and wish to inform others about your expertise? Share your ideas within the feedback beneath.
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Tamila McDonald is a U.S. Military veteran with 20 years of service, together with 5 years as a army monetary advisor. After retiring from the Military, she spent eight years as an AFCPE-certified private monetary advisor for wounded warriors and their households. Now she writes about private finance and advantages packages for quite a few monetary web sites.