When you have bad credit, it doesn’t necessarily mean you can’t buy a car or get a car loan with terms that won’t break your budget. The best thing to keep in mind is that you must shop around because the average interest rate for borrowers varies depending on their credit score. Just because interest rates are higher for subprime borrowers, doesn’t mean you should settle for the first loan condition you’re offered. There is much to be considered when getting an auto lane while having a bad credit score.
1. Don’t Assume the Worst – just because someone else says you have a bad credit score doesn’t mean that your credit is bad. You should check for yourself through a credit report and evaluation.
2. Shop Around – Some lenders are more forgiving than others of your poor credit score. Avoid the places that appeal specifically to subprime.
3. Seek Car – Finance Lenders – focus on finding sources that cater to distributing car loans, rather than those targeting low-credit clients. This includes national, local, and regional banks as well as prominent online lenders.
4. Shop Loan Terms, Not Monthly Fees – Look for the terms that include the cheapest money, which includes the lowest annual percentage rate over the course of a short time period. You end up paying more money if you go for the deal that promises lower monthly payment over a longer period of time.
5. Beware of the ‘Yo-Yo Scam’ – make sure that when you finance your new car that the terms are final, not conditional. It is often known as the ‘Yo-Yo Scam’ when buyers are told days or weeks later that their monthly payments have been increased.
You should always make sure you budget the right amount of money for your new or next vehicle. By using a payment calculator that is both quick and easy to use, and you select the ideal price of your vehicle, you can use the payment calculator to help you estimate what your monthly payments will be. Try it today if you’re looking to budget for your next vehicle, click here.