Having bad credit can make it difficult to make large purchases, such as a quality used car. However, thanks to bad credit car loans, you may still be able to find payments and an affordable interest rate. If you are preparing to look into these loans, we have a few tips to offer about what factors you might want to consider first.
Getting Your Credit Report
Before you shop around for bad credit car loans, it's a good idea to obtain a copy of your credit report first. You can get one for free on an annual basis from the major credit reporting companies Equifax, TransUnion and Experian. Knowing what is on your credit report and taking a close look at the history may help you understand the relation between your credit score and the report and allow you to take the first steps toward repairing it.
Needs vs. Wants
While you may want that fully-loaded sports model, you might want to consider which models will help you save money and which will make it difficult to keep up with monthly payments. For example, if you take on a five-year loan for the car you really want, will you have to work twice as hard just to keep it? Being realistic about what you need vs. what you want to drive may help you avoid hefty monthly payments and high interest rates.
Additional Costs
You may be tempted to grab a loan because the monthly payments sound reasonable to you in relation to what you make in salary. However, you might also want to consider what kind of fees and costs you will be paying for your vehicle, such as tax, title and license fees, insurance costs and more. If you choose a loan and underestimate the total cost, you might get yourself into further debt.
Bad credit car loans may help you get a used car when other creditors turn you down. However, considering all the angles before you sign off on a loan may make for a better deal.
