Saving Money on Bad Credit Auto Loans
Dealing with bad credit auto dealerships or other subprime lenders is an expensive process. But, if it’s the only chance you have of getting into a car, then you don’t really have a choice. You are going to be locked out of some deals and options that a person with good credit has, and it will be much more costly to finance a car with bad credit. While this may be the case, that doesn’t mean you can’t save some money.
Explore Your Options
You have multiple options when it comes to getting a bad credit car loan; you can find a dealer that specializes in dealing with consumers who have credit, check your bank/credit union (they may be a bit more difficult to get financing from), or go directly to a subprime lender. Shop around, and find the best deal. While being locked into what type of car you are going to get (because your bad credit will dictate that) you can still see who is going to give you the best deal on a loan.
Also, don’t be afraid of the dealerships. That stigma that the dealerships have the worst deal when it comes to bad credit auto loans should be eradicated. On the contrary, the dealers will sometimes have the best deal when it comes to bad credit auto financing.
Get Your Credit Score
Your credit score will help the lender you are dealing with determine what type of car you can afford, so make sure you do it yourself. Make sure you get your credit score before you go shopping around for loans/financing. It’s important to know your score beforehand for two reasons. One: if you have too low of a score, you may not be able to get financing at all. Two: if you have too high of a credit score and go shopping for a bad credit car loan, you may be getting a deal you don’t deserve. Also, having this information beforehand will help prepare you for the deal that needs to be made.
Speaking of interest rate, this is also one thing you can control… too an extent. The dealer or the subprime lender is going to show you the cars you can afford, not the ones you want. Which is understandable, that’s why they are there. But, if you are eligible for a car that is sitting around $18,000 and there is also a car available for $14,000, go for the one that costs less. It will still get you from point A to point B, and while you may not have a sunroof or heated seats, that’s okay. A lower priced car means a lower priced loan, which also means less interest paid overtime. Try too avoid getting an extended loan; this causes you too pay way more over a longer period of time because of the high interest rate.
Make sure you are alert when cutting the deal, while not all dealerships or subprime lenders include them, there are a few extra fees that could be added in to the deal you don’t need. The reason you are looking for a car at a bad credit dealership is because you can’t afford to get a good credit loan. That being said, don’t worry about warranties, paint protection, or any other added fees you don’t need. Again, you just need a car to get you from Point A to Point B.
While you may not have full control over the high interest rate accrued while paying off your bad credit loan, that doesn’t mean you are at a complete loss while trying to save money. Just shop smart, pay attention, and make sure to make your payments on time, and your loan will be paid off before you know it.