Options for Buying a Car with Bad Credit and No Money Down
So you have bad credit and every car dealer that you have visited wants you to have money down and of course you do not have it. There are things that one can do when it comes to buying with no money down and bad credit. First you are going to need to understand a few things.
There are two main reasons why a dealer wants you to have money down and they are: It tends to add profit to the sale of the vehicle and It also lowers the amount that is going to have to be financed. Car dealers use certain methods to confuse the buyer into thinking they are paying less but in reality they are paying more overall.
How Car Dealers Trick You
Car dealers use tactics that focus on lowered monthly payments and not the actual price of the car. They will tell you that you only will only pay a small monthly payment and negotiate with you on that price. You end up not bargaining with them on the total cost of the car. People get distracted by the financing aspect that they lose sight of the total price. Remember, do your own financing research and pay off the car with that bank financing check so you will not be tricked or distracted. It is that simple.
Do Your Own Car Financing Research
One of the biggest mistakes that you could think is that you have to use the financing that is offered at the dealership. That is very wrong and in many cases it causes you to pay a huge amount in finance charges and other fees. Many dealerships are full of dealers who only care about themselves and the profit they can make off of you. Try to avoid dealing with them completely. Make it easier on yourself when buying a car with bad credit by finding financing elsewhere. You will end up negotiating a better price and have less numbers to think about.
You should do whatever is possible to avoid working with the finance department of the dealership altogether. You can get lower interest rates by going at the financing on your own through a bank or credit union. You can also find lenders online that offer loans to consumers with bad credit every day, they also will not be asking for a down payment.
If you take the time to look and prearrange your financing altogether when it comes to your bad credit auto loan, you are going to being doing so much better. It will save you time, money, stress and so much more. You will be able to have your choice of car and all you simply have to do is hand the dealer the check the finance company gave you. This makes it easier for bargaining and negotiating on a final price.
That is all it takes to be able to buy a car with bad credit and no money down. This is an awesome way to have car dealerships lining up for your business as well as doing back flips to earn your business. Take your time while shopping for the perfect car and you could be rising in style while being able to afford the payments.
Tags: Do Your Own Car Financing Research
Expected Terms of an Auto Loan for Someone with Bad Credit
Filed under Credit
When you suffer a setback with your credit, your entire financial future can be affected. If you are in the market for an auto loan chances are the terms and conditions to obtain that loan will be different for you because of bad credit than it would be for someone with good credit. The expected terms of an auto loan for someone with bad credit can be difficult but not impossible to overcome. Just know what to expect before you make the deal.
Offering Sub Prime Auto Loans
You can expect to pay a higher interest rate for the loan. Most car dealers are willing to give you a sub- prime auto loan at a high interest rate to cover their interests in you and the vehicle. That interest rate can be anywhere from 14 percent to 20 percent. A person with good credit could get that same loan at a 6 percent to 8 percent interest rate. The car dealership will also shorten the loan term usually from 12 to 36 months instead of allowing you to pay over a period of 6 years or 72 months you will have to repay the loan in 1 to 3 years. This will increase your monthly payment for the vehicle substantially.
There are also other factors to consider such as the amount required for the down payment. Sub prime auto loan lenders usually want an amount for down payment between 30 percent and 50 percent of the value of the car. In this way they are securing their investment because you will be highly unlikely to default on a loan with such a huge down payment and investment in the vehicle to start with.
The payment schedule is also something else to contend with. When you have good credit, lenders usually trust you to make your monthly bill payment by mail, but bad credit auto lenders want the payment directly from your bank account and those payments can be scheduled to occur every two weeks or according to your pay cycle. It may be a good thing because you are not required to pay such a lump sum every month but can spread it out over the course of two weeks, and the added convenience of having the funds withdrawn from your account electronically can save you time and ensure that your payment is never late.
These a few of the expected terms of an auto loan for people with bad credit. It does not have to be this way forever, only until you can re-establish your credit rating and then you can trade your vehicle in for something you really want and at a better interest rate when your credit improves.