If you have bad credit, getting the right car at the right price for your budget can seem to be impossible. But you can get bad credit car loans, if you know where to look, and know the signs of a good lender. Here’s what you need to know about getting the best deal on a bad credit auto loan.
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Bad Credit Car Loans And Risk
First, it’s important to understand what your bad credit rating means, precisely. As we all know, we’re assigned a credit score by three different credit bureaus. That credit score is determined by a number of factors: Your payment history, how much credit has been extended to you, how much of it you’re using, and a host of other factors. All of that is boiled down to a three digit number that tells financial institutions how much of a risk you are to work with.
That number tends to determine the interest rates you’re offered and the overall terms of the loan. The worse your credit, and the more of a risk you are, the higher the interest rates you’ll see and the longer the term will be on a car loan. And yes, some lenders won’t work with you, but that number will be far lower than you might think. Bad credit car loans have been enjoying a changing reputation as lenders develop a better understanding of the market; there’s a difference between somebody getting back on their feet and a ne’er-do-well, after all. Still, it’s an ocean, and in any ocean, you’ll find sharks.
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Finding The Right Lender
It’s important to comparison shop between lenders when looking for bad credit car financing for a number of reasons. The first is simply that you should know what you can get and use that as a negotiating tactic. But the second is to get a general sense of who’s offering what, and who might be too good to be true.
It’s smart to use lending networks to do this, not least because those networks carefully pick and choose who they send you to. But as always, you should think before you leap. First of all, ask friends and family about lenders they’d recommend or that they’d avoid, and check up on lenders online to see what customers have to say. Look for more neutral sites; sites with names like “ripoff” in the title probably aren’t going to offer an honest overview.
Also keep an eye out for issues during the lending process. If a lender doesn’t feel right to you, or encourages you to do things you’re not comfortable with, that’s a lender you shouldn’t be working with. After all, you’re about to spend years working with these people: You want to start on the right foot.
Once you’ve picked out lenders, look for the lowest possible interest rate and the shortest possible term that will fit into your budget. With some careful research, and some effort, you should be able to find the bad credit car loan you need.
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