Tips for Choosing the Right Vehicle When Buying From a Bad Credit Car Dealer
If you’re looking to buy a car from a bad credit car dealer, you may be worried about the potential consequences of doing so. Here is an expert guide on how to choose the right car for you and avoid common scams and traps that some bad credit car dealers use to lure unsuspecting customers.
Applying for a Bad Credit Auto Loan
To secure an auto loan, even if your credit is poor, there are a few fundamental steps before taking the plunge. Remember to check your credit score before purchasing and finalizing all terms. You need to do this:
- Accumulate a sufficient down payment (at least 20%)
- Educate yourself on the prevailing car loan interest rates and determine how much you can pay monthly.
- Shop around to compare different car dealerships low credit. If a lender disapproves your application, ask them what you missed so you can improve on the next attempt.
- Prequalify with lenders to see your eligibility.
The best providers do not charge application fees, and their service doesn’t worsen your already damaged credit history. Bad auto credit companies usually have an online prequalification tool where you’ll fill out your details to check your chances of approval for a new or used vehicle. The results are often instant. Ensure you have a verifiable salary (check the minimum amount with your provider). They might give you multiple offers- get what you can afford.
How to Choose a Car You Can Manage to Finance with Bad Credit
There are numerous cars available for borrowers with low credit scores. But you shouldn’t buy something expensive or impractical just because you have poor credit. Some good options may be less costly and easier to get financing for.
Affordable Cars Are the Best
A car is a depreciating asset, not an investment. Unless it’s a Ferrari, it will lose about 50% of its value within five years. Therefore, focus on a model you can pay off the soonest as possible.
Before you start your search, list the features you want in your new car and evaluate what is available on the market that meets those criteria. For example, if you’re looking for an affordable vehicle with good gas mileage, avoid SUVs and pickups unless they meet your other requirements.
Focus on Loan Terms Rather Than Low Monthly Payments
Low-credit car dealers will present you with varied combinations of monthly installments, down payments, and loan terms. Many providers suggest a small down payment and low monthly payments for a longer loan term. Such provisions are risky because you’ll pay more interest in the long run. You’ll get negative equity, i.e., owing more than the car’s worth.
Be Wary of Camouflaged Expenses
Some sloppy car dealers disguise themselves as legitimate businesses to deceive non-prime buyers into thinking they will qualify for a reasonable financing rate when the rates may be much higher. Most scams will have conditions like buying add-ons, e.g., auto insurance, extended warranty, and after-market services. Such undercover charges can accumulate fast and cost you more interest throughout the loan term.
Not all bad credit car dealers are exploitative. The key is finding a reputable provider. Consider negotiating for better terms, pay more upfront, and don’t hesitate to pay a larger monthly installment. Always take the dealer’s advice with a grain of salt. The car they claim you can afford to finance is not necessarily what you need for survival. By following these tips, you can ensure that your purchase goes smoothly and that you don’t end up with a car you can’t afford or won’t be able to use.