What DriveTime Is and How It Operates

DriveTime is a used car dealership chain that operates in multiple states and specializes in selling vehicles to buyers with poor credit, no credit history, or recent financial problems. Unlike traditional dealerships that may turn you away based on your credit score, DriveTime focuses on financing customers who have been rejected elsewhere. The company handles both the sale and the financing in-house, meaning they approve loans and set terms themselves rather than sending you to a bank.

The dealership operates physical lots where you can browse inventory, test drive vehicles, and complete paperwork on site. DriveTime's business model depends on financing deals that traditional lenders consider risky, which affects how they structure their loans and what interest rates they charge. Understanding how this works before you walk onto a lot helps you make a clearer decision about whether buying from DriveTime makes sense for your situation.

Key Takeaways

  • DriveTime finances its own car sales and approves buyers with poor or no credit history, but charges higher interest rates than traditional lenders because of the risk they take on.
  • You will need a valid driver's license, proof of income, and proof of residence to start the financing process, and the dealership may require a down payment.
  • DriveTime vehicles come with a warranty period, but used cars carry inherent risks — have any vehicle inspected by an independent mechanic before you commit.
  • The interest rate you receive depends on your credit history, income, and down payment amount, and rates at DriveTime are typically higher than rates from banks or credit unions.
  • You own the car once the loan is paid off, but DriveTime retains a lien on the title until the final payment is made.

What Documents You Need to Bring

When you visit a DriveTime lot to buy a car, bring a valid government-issued photo ID (driver's license or passport), proof of your current income, and proof of your current address. Proof of income can be a recent pay stub, tax return, or bank statement showing regular deposits. Proof of address can be a utility bill, lease agreement, or bank statement with your name and address on it.

If you have a co-signer — someone who agrees to be responsible for the loan if you cannot pay — bring their ID and income documentation as well. Some buyers also bring proof of employment (a letter from their employer stating their job title and how long they have worked there) to strengthen their case, though this is not always required. The dealership will tell you what else they need once you start the process.

How the Financing Process Works

DriveTime's financing happens at the dealership itself. You choose a vehicle, negotiate the price, and then sit down with a finance manager who reviews your income and credit history. The manager will tell you what interest rate the dealership is willing to offer based on the risk they perceive. This rate is typically much higher than what a bank would charge — sometimes 15% to 29% or more, depending on your credit profile and the size of your down payment.

The finance manager will also discuss the loan term (how many months you have to pay back the loan) and your monthly payment. Longer terms mean lower monthly payments but more interest paid overall. You will sign a loan agreement that spells out the interest rate, term, payment amount, and what happens if you miss a payment. Once you sign, you can drive the car off the lot that day in most cases.

DriveTime typically requires a down payment, though the amount varies. A larger down payment lowers the amount you need to borrow and can result in a slightly better interest rate. If you cannot afford a down payment, ask the dealership whether they have programs that waive or reduce it — some locations do, though this is not may provide.

Interest Rates and Total Cost of the Loan

The interest rate you receive at DriveTime depends on three main factors: your credit score or credit history, your income relative to the loan amount, and how much you put down. Buyers with no credit history or recent late payments typically face rates at the higher end of the range. A larger down payment can lower your rate slightly because it reduces the dealership's risk.

To understand the true cost of buying from DriveTime, multiply your monthly payment by the number of months in your loan term, then subtract the price of the car. That difference is what you pay in interest and fees. For example, if you borrow $10,000 at 20% interest over 60 months, your monthly payment will be around $238, and you will pay roughly $4,300 in interest alone over the life of the loan. Compare this to what a credit union or bank would charge before you commit — even a few percentage points lower saves you hundreds of dollars.

What Happens If You Miss a Payment

Your loan agreement will state what happens if you miss a payment. Most agreements allow a grace period of 10 to 15 days before a late fee is charged. If you miss multiple payments, DriveTime may repossess the vehicle — meaning they send someone to take the car back. Once repossessed, you still owe the remaining balance on the loan, and the repossession will damage your credit score.

If you think you will miss a payment, contact DriveTime as soon as possible. Some dealerships work with buyers to restructure the loan or set up a payment plan. The sooner you reach out, the more options you may have. Waiting until after you miss a payment makes negotiation much harder.

The Warranty and Vehicle Condition

DriveTime vehicles come with a warranty that covers certain repairs for a set period — typically 30 to 90 days, though the exact terms depend on the vehicle and your location. This warranty protects you against major mechanical failures but usually does not cover wear items like tires, brakes, or batteries. Read the warranty document carefully to understand what is and is not covered.

Because these are used cars, they carry the wear and tear of their previous owners. Before you buy, have an independent mechanic inspect the vehicle. This costs $100 to $200 but can reveal hidden problems that the dealership's inspection missed. If the mechanic finds serious issues, you can use that information to negotiate a lower price or walk away entirely. Never skip this step — it is the best protection you have.

Building Credit While You Pay Off Your Loan

One benefit of financing through DriveTime is that your on-time payments are reported to credit bureaus. This means that if you pay your loan on time every month, your credit score will gradually improve. After 12 to 24 months of perfect payments, you may be in a position to refinance the loan at a lower rate through a bank or credit union, which would reduce your total interest cost.

To maximize this benefit, set up automatic payments so you never miss a due date. Even one late payment can undo months of credit-building progress. Some banks and credit unions offer special programs for people rebuilding credit — once your score improves, explore those options to see if you can lower your rate.

Frequently Asked Questions

Can I return a car to DriveTime if I change my mind?

DriveTime's return policy varies by location and state law. Some locations offer a short window (typically 3 to 7 days) to return the vehicle if you change your mind, but this is not may provide. Ask about the return policy before you sign the paperwork. Once the return window closes, you own the car and are responsible for the loan.

What if I want to pay off my loan early?

Most DriveTime loans allow you to pay off the balance early without penalty. Paying early saves you interest because you stop accruing it once the loan is closed. Check your loan agreement to confirm there is no prepayment penalty, then contact DriveTime to ask how to make a lump-sum payment.

Do I need a co-signer to get financed?

Not always. DriveTime finances many buyers without a co-signer, especially if you have a steady income and can make a down payment. A co-signer helps if your income is low or unstable, but it is not required in most cases. The dealership will tell you whether they recommend one based on your situation.

What is the typical interest rate at DriveTime?

Interest rates vary widely depending on your credit history, income, and down payment. Rates typically range from 15% to 29%, but some buyers may receive higher or lower rates. The only way to know what rate you will receive is to visit a dealership and go through their approval process.

Can I trade in my old car at DriveTime?

Yes. DriveTime accepts trade-ins at most locations. The dealership will appraise your current vehicle and explore its value toward the purchase price of the new car, reducing the amount you need to finance. Bring your title and keys when you visit so they can evaluate the trade-in.