Buying a car is very difficult if you have bad credit. However, it’s not impossible, thanks to the bad credit car loan lenders who will finance for those with less than perfect credit. Before you get too excited about this option, make sure you know what you’re getting into.
High Risk = High Payments
Lenders who take a chance on those with bad credit aren’t doing it out of the goodness of their hearts. They see an opportunity to make some money by providing a service to those who need it. They know that many people need vehicles to get to work or other obligations and they can’t get approved through traditional auto lenders.
These bad credit lenders offer to finance a vehicle for someone with a low credit score, but they understand they are taking a risk. To compensate for that risk, they will charge a high interest rate. Some will have a rate around 15 or 20 percent while others may go even higher. There are also those who are happy to make some money while being more reasonable with an interest rate around 10 percent.
Expect to Bring Something to the Sale
If you want to be financed with a low credit score, you will need to carry some of the risk. This means having a down payment either in cash or a vehicle you can trade in. You may have to pay half the price or less, but don’t expect to get financed with no money down.
You may also be limited to the kinds of vehicles you qualify for. Some will be at the low end of the price range while others may require you to purchase a brand new vehicle with payments you can’t afford.
Before you go with a bad-credit car lender, compare your options. Look for someone with a reasonable interest rate and terms. If you can wait until you improve your credit, it will be better for you. However, if you must have a vehicle, make sure you know the terms and your payments before you sign.
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