How to Get A Good Deal from a Car Loan

Despite the fact that banks and other lending institutions seem to be coming back to engage the bad credit customer, there may be speculations that it will be an easy way out to obtain car loans. Certainly not! Banks do not want to make the mistake they did prior to the pre-credit crunch period. 

Although things seem brighter for the borrower, it may not be as easy bridge to cross. With statistics showing that lending for customers with bad credit has increased, it may not automatically indicate that every other person with bad score rating will be approved of car loans. For the car buyers, they will need to take control of their credit score in order to get the best deals and interest in their car loans.

As one way to remain informed of the interest rates available in the market, car buyers with bad credit should examine the average rates offered in the market. There are different sites where such information may be obtained from including myFICO.com car loan chart. This chart provides reliable information on interest rates which are offered to consumers on different spectrums of FICO score.

The charts also show the payment amounts for different car loan terms such as 60, 48, and 30 months period based on the interest rates provide in each range of FICO score. It is particularly important for you to estimate where your FICO score falls and the rates offered. This gives you an insight on what you expect to get from the market. It is also important to keep watch of your credit score and analyse it to ensure it does not reflect errors.

It is not enough to rely on the credit score rating which you get for free from the major credit bureau. You can purchase your current credit score report from myFICO.com website or from the credit bureaus before you go to seek for car loan deals. Assumptions don’t always work when trying to strike deals for car loans. You need to really have confidence with your credit score. You may be surprised that you are able to get a car loan more easily than a person with a higher score than yours.

You should not assume that because your score does not meet the loan requirement, you cannot get a loan. The problem is that, even if you get a car loan, you will most probably pay more in interest rates. For buyers with lowest credit score falling below 550 points, they are likely to get higher rates on their loans.

Saving is a good option if you want to get a good deal on a car loan. With low score, you need to make a bigger down payment that will enable you lower the interest rates or term of repaying the loan. It is advisable to have at least 25 percent of the price of the vehicle before you go on the negotiation table to present your deal. If you are in bad credit, you may need to consider a used car that has covered fewer mileages.

Used cars are cheaper and this means that you may easily get a car loan that can enable you purchase the vehicle easily. However, the interest rates for used cars may be higher than those for new cars but you do not have to borrow heavily to buy a used vehicle like the case of a new car, and this is something important for a consumer ailing with bad credit score. Always have the car checked by a qualified mechanic to ensure that it is in good operating condition.