Home > Auto Loans >Bad Credit Car Loans > Bad Credit Car Loan: Know Before You Go To Buy A Car
Bad Credit Car Loan: Know Before You Go To Buy A Car |
|
Normally a bad credit car loan can never prove a very good deal for the consumer and as such you should be very careful while buying a car with bad credit and keep in mind the following five tips. 1) Don't expect to get a 0% APR loan: 0% APR (annual percentage rate) as promised in ads needs to be qualified with the fine print attached to it. This is only applicable with approved credit, which denotes a credit score above 700, which most new car buyers do not qualify for. There is also a 36-month term requirement, which signifies a higher monthly payment. Moreover, used cars are not covered under these deals and it is well known that people with a poor credit are charged higher interest rates for a bad credit car loan. The other factors that raise rates are: if the current job tenure is less than six months; if the stay at the current address is less than six months; if your credit balances are at, or near, their limits; and if your debt-to-income ratio is very high. 2) Don't forget GAP insurance if you are upside down on your bad credit car loan: Although liability insurance is mandatory for the vehicle that you buy, you should not overlook GAP insurance which covers the gap between what you owe on your vehicle and what it's actually worth. If you have put down less than 20% at the time of purchase, you would get upside down on the bad credit car loan which means that you will be responsible for the difference between what your insurance company pays out and what you still owe on the bad credit car loan, if you are in an accident or the car is stolen. 3) Don't accept the finance package offered by a dealer without shopping around: Normally auto dealers get a cut of the interest rate as they team up with the banks and other financial institutions in providing bad credit car loans. You could, however, find a better bad credit car loan online, unless the automaker is offering a low, subsidized APR. You should be on your toes, as most dealers will never offer helpful advice on how to buy a car with bad credit. 4) Don't miss the potential pitfalls of having a co-signer: You may have to arrange for a co-signer as required by some dealers because of your poor credit history. However, having a co-signer means that the bad credit car loan would be actually in the name of the co-signer and even though you would be making the payments, you won't get credit for this and it won't help improve your credit rating. Moreover, you won't be able to get insurance on a vehicle that's not in your name. To overcome these problems, you should ensure that the loan is in both names. 5) Don't fall into the traps set for bad credit borrowers: Small-time lender and questionable dealers offer special deals which are meant to take unfair advantage of gullible consumers with less than perfect credit. Therefore, before applying for a bad credit car loan, you should check out the dealership with the Better Business Bureau and avoid low introductory interest rates on auto loans, as they may be part of a scam. You might have to repent later. You should work with a reputable lender to avoid the pitfalls of sub-prime lending. You should go online and check out the various offers available there and compare the rates before deciding anything. Moreover, banks and websites offer better interest rates for bad credit car loans. Within 24 hours of your applying online, many companies will vie with each other by offering most competitive interest rates and payment terms. Sometimes these offers are better than the dealer financing. Refinancing online can save you money, if you have a loan with higher interest rates. Banks or credit unions also offer competitive rates for members. |
|
| ------------------------ |
|---|
|
|
| ------------------------ |
|---|
|
|
|
|
| ------------------------ |
|---|
|
| ------------------------ |
|---|
Custom Search
|
| ------------------------ |
|---|
|
|
| ------------------------ |
|---|
Consumer Alerts | About | Bookmark Us | Contact | Espanol | Privacy Statement | Copyright | Terms & Conditions | Financial Widgets | SiteMap
Copyright © 2006 Credit Loan, LLC. 235 APOLLO BEACH BLVD, STE 218 Apollo Beach, Florida 33572 All rights reserved.
Disclaimer: The content provided on CreditLoan.com is for informational purposes only; do not make any financial decisions based on its content. Financial decisions are personal, based on an individual's situation. Consult with a financial professional before making any financial decisions. CreditLoan.com is not liable for your financial actions.
