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Bad Credit Car Loan: Avoid Dealing With A Car Dealer |
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Of the many ways by which you can get a bad credit car loan, one option is to select a car at the local dealership, which will also arrange a bad credit car loan for you through its finance company. Moreover, most major automobile manufacturers also have their distinct finance programs for your convenience. The on-site specialists are also at hand at the dealerships to help you to find your way through the process of obtaining bad credit car loan. Obtaining a bad credit car loan at the dealership itself is very convenient as they promise the best available rates. Irrespective of what the dealership might say, you should know that the dealers do not provide the finance themselves. They are simply the agents of other financial institutions and they are simply arranging the finance for you and in the process they routinely add percentage points to your bad credit car loan rate, thereby making it costlier for you. Many car financing deals offered by the dealers promise a 0% APR, which is not at all feasible, although it might appear to be very alluring to the buyer. It is only in very rare cases that people can get 0% APR on their bad credit car loan and as such many car finance deals die a natural death much before maturity and this causes a very distressing experience to the car buyer. Dealers do not work for nothing and so they make a commission on the interest rate if you take the bad credit car loan through them. Their cut of the financing deal can sometimes escalate the cost of your bad credit car loan considerably. Even if you get a loan from the bank through the dealer, it may have a higher interest rate than if you applied directly to that same bank. The car dealers mark up your bad credit car loan interest rate, whether they arrange the loan from auto lenders or from other finance companies. They will then either share the difference with the lender or pocket it entirely. The gullible car buyer is the loser in the bargain and they have to cough up thousands of dollars more than what they actually should have spent. As the mark up is normally merged in the final interest rate, most buyers are unable to realize the loss that they are suffering. In case they do smell a rat and ask questions, they are curtly told that they do not qualify for the lower rate. As an example, if you qualify for a bad credit car loan at 7% interest rate, you will be told that you only qualify for a 10% and the dealer will quietly pocket the extra 3% as a lump-sum payment from the finance company. Interestingly, this is legal and an accepted practice among dealers. To avoid the above extra payout, you should get your credit score online and then find out from lenders, including your bank and credit union, to see what rates you qualify for. This will be a valuable tool in your possession while negotiating with the dealers. Negotiate Your Loan Terms With The Dealer If you have the information regarding the interest rates applicable to you, you can negotiate successfully with the dealers and if you don't like what they are offering, you can simply call off the deal. Most car salespeople try to confuse the consumer with various factors such as price of the car, your trade-in and financing, all thrown into one. This way the consumer can easily be tricked into a bad deal. Avoid such a situation and insist on settling one thing at a time. If not, simply walk away. Car salespeople are normally anxious to meet their sales targets at the end of the month and this is the time when you should go for the kill, as the salesmen will give you unthinkably low prices just to meet their targets. The secret is to be patient, look around for the best rates and then make your move. |
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