If you have bad credit or no credit, shopping for a new vehicle is not going to be easy. Cars are expensive, and the average consumer cannot afford to purchase even a used car in cash, which is why car loans are necessary. However, when you have bad credit, your lender pickings are going to be much slimmer than those with good credit, and scammers may try to take advantage of you. When shopping for bad credit car loans, you need to be smart and take extra measures to avoid being hoodwinked. Here are three things you can do to avoid a bad bad credit car loan:
Know Your Score
First and foremost, don’t admit that you have bad credit and then admit that you don’t know what your score actually is. These types of confessions are gold for dealers, as it means they can charge whatever interest rates they want. Before car shopping, run a credit check. Your score may be better than you think, and when the dealer comes back with not-so-great rates, you can either walk out or use your knowledge to negotiate.
Steer Clear of Loans With Long Terms
A lot of people with bad credit are enticed by loans with long terms, as it means lower monthly payments. However, lower monthly payments often add up to more money spent in the long run in interest and other fees. Ideally, your loan term should be no longer than five years.
Don’t just take the first loan that you’re offered. Visit several dealers and lenders to see what types of terms and rates they’re willing to offer. Even if you like the terms and the cars offered by the first dealer, having several offers can put you in a position to negotiate.
There are good bad credit car loans out there and bad car loans for people with bad credit. Use the advice above to find the former. You’ll save more in the long run and ultimately be happier with your purchase.