Buying a Car – EASY
Buying a Car with Lowest Auto Loan Rates – IMPOSSIBLE
This is the story of every bad credit buyer in the nation. Today, every buyer with credit problem can get a car loan but getting cheapest rates is still a difficult task. Lenders and dealers will promise you lowest rates (as low as 2.49% for 6 year car loan) but provide shocking rates while signing the contract.
It is because lowest rates are reserved for people with incredibly high credit score. Also, lenders charge higher rates from bad credit buyers because of the high risk factor. This means bad credit buyers should forget getting lowest market rates on auto loans. Instead, you should focus on lowering the loan rates that are available for you. You can still manage affordable rates. And, to get those rates you have to work hard. This way you will not get minimum rates but at least your loan will become much more affordable.
After years of experience in the sub-prime market, I have compiled the list of things which can help you get affordable auto loan rates.
- Make a car buying budget. Ensure that you don’t go overboard.
- You will need down payment and/or co-signer as additional support.
- In case of no down payment, you can sell your old car or opt for trade-in.
- Always, always and always search for a sub-prime car lender and not a bank/traditional lender.
Here’s what you should not do
Few bad credit buyers commit these mistakes and end up ruining their credit score. Make sure you don’t fall prey to such blunders.
Choosing an Expensive Car
Never buy an expensive car with bad credit history. It will increase your loan burden and cause harm to your credit score as well. Instead, opt for used cars as they are available in lower price. This way you will be able to keep the loan amount under control.
Not considering your DTI Ratio
If you don’t consider current debts before buying a new car, you are inviting trouble. This is because you may end up increasing your debt to such an amount that it will become difficult to repay. And, when you cannot make regular payments, your score will further deteriorate. So, do calculate your DTI and ensure that you don’t have unmanageable debt.
So, this is how you can manage low rate auto loan despite bad credit score. I understand that it looks hard but remember the words of Beverly Sills: “There are no shortcuts to any place worth going.”