Bad credit may not be the nightmare it is made out to be. Cars are cheaper purchases paid over a shorter amount of time. Depending on the extent of your bad credit- you might even get a car loan at prime. Follow these steps to get the best car loan you can possibly get:
- Don’t assume the worst
A bad credit score is not the only thing lenders will look at. They will also look at the credit history so, while two buyers may have the exact same credit score, they both may get different interest rates.
- Look for car finance lenders
A home loan and a car loan are very different things. Car loans are smaller and are paid back over a shorter period. Home loan lenders may penalize you more for bad credit than car lenders. You can still get a prime or near-prime car loan. You also do not want to limit your options by only seeking out lenders catering to low credit clients.
- Start close to home
You never know what benefits you can get from lenders you already have a history with. Your bank or credit union has a more in-depth idea of your credit history than most finance lenders. It will also not hurt to check if your employer or insurance company offers auto financing.
- Do not limit your options – shop around
You never know what deal you are going to get. Some lenders will see your credit score in a more positive light than others, so compare a few options before deciding on one.
- Don’t just look at the monthly payment amount
Search for the lowest annual percentage over the shortest time period. Do not get distracted by “cheap” monthly payments. If the only way to make the payments is over a long period of time then it is time to look for a more affordable car.
- Beware of add-ons
Non-prime buyers are more likely to receive lending contracts stuffed with non-essential add-ons like extended warranties, after-market services and even insurance. Make sure that the loan does not hinge on purchasing add-ons.
- Finalise the terms before you sign
If you arrange finance through a dealer, make sure the terms are final, not conditional. Yo-yo scams inform buyers weeks or days later that the financing is not yet complete and they must therefore accept a higher interest rate. You could be paying up to 5% more on your loan compared to a buyer that was not scammed.
Keeping these tips in mind, you could be well on your way to driving your dream car. Earn-a-car offers the easiest way to finance your car and even earn cash while doing so. Contact us today by visiting our website.