You need a car, but you don’t have good credit. You may do your homework, and have a general idea what to expect when dealing with an auto dealer. Here are some ways to buy a car with bad credit.
Know the interest rate market. Sure, you might not have good credit, but there are ways you can check in advance to know what interest rates are applicable to your credit level. If you don’t do your homework, some dealer might quote you a very high interest rate and tell you that’s the best you will do anywhere in your area. Don’t fall for it, unless you have already checked and the dealer’s quote IS the best you can do.
Don’t sign up for the extras unless needed. Regardless of what a dealer tells you, you are NOT legally obligated to purchase gap insurance, credit life policies, or other add-ons some dealers tell you are required due to your poor credit. Even if this only adds a few dollars per month on your loan, that can add up to a lot of money over the life of the loan. Don’t fall for it.
Know if your loan is based on pre-calculated interest. poor credit applications may be based on interest that has been pre-calculated. If you try to pay the loan off early, thinking you will be saving interest, you may get a shock to learn you have to pay off all the interest regardless of the payment date. If you can, try to negotiate a different loan, but at least be aware of this restriction if you must take a pre-calculated interest loan.
Look for pre-payment or other penalties. If your financial situation improves, you might want to prepay your loan. Don’t wait until then to find out your loan is subject to penalties for pre-payment. It may only be a few hundred dollars, but know this in advance, or try to get the penalties removed before you sign.
If you have any questions about bad credit loans, contact us at the Credit Center of Suffolk County. We have helped many clients with their credit issues, and look forward to helping you.