Indirect Financing for High-Risk Consumers

Consumers who have run into credit problems in the past can face difficulty when they need to finance a new or used car purchase. Those with lower credit scores and without enough cash to purchase a car outright may not be able to get approved for loans through traditional banks. Even a moderate history of credit problems can result in the denial of a loan for consumers who have the ability to put some money down on the purchase. Consumer Portfolio Services is an example of a financing alternative for those with less than stellar credit histories. These types of lenders assist those with lower incomes, short credit histories, and poor credit obtain the loans they need to make larger purchases.

Indirect Financing

Firms that specialize in helping high-risk consumers obtain financing for vehicle purchases contract with dealerships. Indirect finance firms purchase sales installment contracts from dealers, which then in turn allows these funds to be directed towards the financing needs of high-risk consumers. The high-risk consumers usually have to pay higher interest rates or pay more for the financing over the length of the loan. Although this route is more expensive to the consumer, it does help the consumer re-establish a good credit history.


Re-establishing a good credit history is one of the top advantages for high-risk consumers. First, they learn the value of making on-time and steady payments. Second, indirect financing firms often provide education on how to re-establish a good credit history and what to look for when purchasing a car. Indirect financing firms help educate consumers on how to make sound financial purchases by looking at the blue book value of different vehicles, resale values, and the overall cost of financing versus paying outright for a larger purchase.

Purchasing a vehicle can be stressful for many, since it is a purchase that consumers have to live with for the long-run. Although not as stressful as purchasing a home, nerves can be heightened if a consumer knows there will be problems obtaining lending. A lack of a credit history, blemishes on one’s credit report, and the lack of income can make obtaining a car difficult. Indirect financing firms help consumers overcome these obstacles and obtain the funds they need to secure what many consider a necessity to function in modern society.