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Tips on How and Where to Get Bad Credit Auto Loans

It is the dream of many to walk into a car dealership and pay for a much needed, or wanted, car in cash. However, very few can afford to do so. That is where a bad credit auto loan comes in handy. But with numerous sources, one must shop around for the best pocket friendly loan.

Credit Unions usually offer their members non-negotiable loans. These loans have the perk of being quite sizable and come with low interest rates. Those lucky enough to be members can take advantage of this and secure financing for buying their cars.

Banks also offer car loans but while being more reasonable than financial institutions, they are less likely to offer out loans to individuals who may have bad credit or lack collateral. Finance companies also offer loans but because they are willing to take greater credit risks, it translates to higher interest rates. Furthermore, unlike dealerships that when offering financing will get profit from the sale of the car and the loan, the finance company only makes a profit from the interest they charge.

You can get a bad credit auto loan from various dealerships, and this can work to the borrower’s benefit if they are fully informed and play their cards right. Another benefit is that the processing time is shorter and approval more likely. After all, they want you to buy their car. However, keep the following in mind:

Before you negotiate the terms of the loan, negotiate the price of the car you want to buy. This will prevent a situation where the dealer will raise the price of the car while trying to pacify you by offering lower interest rates. In the end, you will be shelling out a lot more money than you had to. Furthermore, if you want to trade in your old car, discuss the price the dealer will take it for it, after the price of the new car is set (which you must aim to make as low as possible). Then try to get the highest possible price for the trade-in. If you feel that the amount is unreasonable, do not settle for it. You can sell it elsewhere. And the dealer knows that.

Always remember that part of the profit from the interest on the loan goes to the dealership, so they have the incentive to make the bad credit auto loan as attractive as possible. Remember, the most crucial thing to do as you look for a bad credit auto loan is to shop around to make sure you are getting the best possible deal.

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