There are benefits to bad credit car loans. For one, you can buy a car when you have low credit. You can also boost your credit score. Once you qualify for a loan, the next step is shopping for a vehicle. It is a major step, and there are some precautions you must take. There are missteps buyers make that cost them money. Below are the most common mistakes – and how you can avoid them.
Signing Documents Without Reading Them
The paperwork for a loan may contain unfamiliar information. Read the document and ask questions. If you sign without reading, you may be agreeing to terms that may cost you extra money or even worsen your credit score.
Taking the First Deal
Generally, bad credit car loans have higher interest rates. Still, it is best that you shop around for the best deal. Check with at least three dealerships and ask them about their interest rates. You can find a dealer with lower rates. This will save you a lot of money.
Adding Extras to Your Car
You can get all kinds of extra features for your car. While it is tempting, it is best to avoid them. These features add hundreds or thousands of dollars to the sales price. Stick with a quality car that is equipped with what you need. This way you can avoid monthly budget-busting car notes.
Making Payments at the Car Lot
There are car dealerships that require that you make payments at the lot. These dealers don’t report to the credit bureaus. Buy your car from a dealer or finance company like ours who reports to credit agencies. When you make payments on time it will increase your credit score.
Bad credit car loans help people buy vehicles. Like any loan, it is always best to do your due diligence. You are getting your finances in order. The last thing you want to do is make a mistake that causes you more stress and financial hardship.
Get back on the road again with bad credit car loans and a new or used vehicle. We understand unforeseen things happen in life that can muddy up your credit, and we are here to give you a second chance with a car and a loan. Having your car repossessed is a traumatic event, and it can cause people to delay buying a new car. The aftermath of repossession may leave a person feeling helpless, and he or she might even pass up employment opportunities because there is no car to drive to work.
We want you to buy our cars and we have confidence that you will rebuild your life and credit. That is why we consult with you not only about what kind of vehicle you are looking for, but what kind of financing best suits your lifestyle and needs. We aren’t out to charge high interest rates, but want you to afford our cars so you can come back to us again for maintenance or additional cars in the future. Our experts can give you a reasonable rate of interest and low monthly payments so you can have peace of mind.
There are many reasons that people choose to buy their cars through car financing. Whether you need to finance the purchase of your car because you don’t have enough cash to buy it outright, or whether you have a strategic financial plan that only allows you to spend a certain amount of money each month towards your car, there are some very sound reasons for doing car financing. Here are some of the reasons that you may want to consider car financing:
It Helps You Keep Your Savings
Whether you have a hefty savings account or are just trying to pay off your current bills with whatever left-over money you have each month, buying a car with car financing can help you preserve whatever nest egg you may have (or hope to have). By using a car financing option, you’ll pay small monthly payments towards the purchase of your car, eliminating the need to pay one huge bill at once, which may deplete your savings altogether.
After all, everyone should strive to have a little safety net savings to tide them over in the event of an emergency. Buying a car should never come before having that safety net.
You May Earn More Money by Keeping Your Money
Even if you have a huge sum of money that you can put towards the purchase of your car, it may be wise to only take a portion of that money to use as a down payment and keep the rest in a high interest savings account. The high interest savings account, such as a CD, will help you earn a predictable amount of interest on the principle amount of money that you have.
The trick to earning money through interest is to ensure that the savings account that you find has a higher interest rate than the loan interest rate amount that you will be pay for the purchasing of the car.
Even if there is a one point difference, you will come out ahead if you are able to keep your money in the high interest savings account and get financing for the car purchase.
There are many ways to save money in the long run through car financing. Our dealers and car financing experts are happy to help you find methods to improve your savings and get behind the wheel of a car that you can afford for the long-term. Contact us today for more information about how we can help you with your car financing.
Credit is one of the important factors that go into getting the best car financing. Many of our car loan customers are aware of the importance of credit and their credit scores, but they are not too certain of what credit exactly is or how it affects them. Here’s a brief overview of credit scores and how they may impact your car financing:
Credit scores are made up of five different categories. Each category carries its own weight and amounts to a different percentage of your overall credit score. Here’s what you need to know about these categories:
Length of credit history – this category amounts to 15 percent of your entire credit score. The length of your credit history is generally determined by the first account that you opened, such as the first credit card or bank account. It’s best to keep long-standing accounts. Therefore, be sure that you do not simply jump from one credit card to another or one bank account to another.
Payment history – your payment history will amount to 35 percent of your credit score – making it the most important aspect of your credit score. When going for car financing, it’s important to be able to show that you have a history of making payments on time. Therefore, if you have a bad credit score, try focusing on repairing this aspect of your credit score to get a boost. Also, taking out a car loan that you repay can help to repair this aspect.
Types of credit used – a credit card is a different type of credit than a mortgage. This category of your credit score amounts to ten percent of the entire score. To boost this section, limit the number of credit cards and general consumer credit you have and shoot for more long-term, asset building credit lines, such as a car loan or mortgage.
Amounts owed – the amount of money that you owe accounts for 30 percent of your credit score. This category is based on a combination of percentages that you owe on credit limits as well as raw money that you owe. Of course, try to limit the amount of money that you owe on consumer credit lines, such as credit cards.
New credit – this category makes up 10 percent of your credit score. New credit may be a concern for lenders because new credit may be something that you’re still adjusting to. Therefore, try to limit the amount of new credit you have when applying for a car loan in order to get the best rates. At Loan Doctor, the best place to get car loans in Canada, we look forward to helping you get a great car loan or to improving your credit so that you can qualify for lower interest rates and higher loan amounts. Contact us today for more details or to get started!
When it comes to improving bad credit scores, it’s important to understand that improving your credit requires commitment and that may take several months or years to actually improve your credit in a meaningful and long-lasting way. However, by getting started with the process of improving your credit today, you’ll be setting yourself up to have a better financial situation for years down the road. Remember: most meaningful actions take time to see to fruition – and improving your credit is no different!
Here are 4 important steps you can take today to start improving your credit for the long-term:
Take out a Car loan
Even if you have to take out a high interest rate loan, take out a loan and commit to repaying it. One of the best ways to improve your credit is to get started developing a track record of financial responsibility, which means repaying loans and other debts on time and in full. However, in order to repay those debts, you have to actually take one out!
If you’re like many people, you probably have several different credit cards and loans at any different time. You probably also have a balance on these debts. In order to increase your credit score, it’s important that you minimize the amount of money that you owe to lenders. Therefore, make a plan to repay these debts as soon as possible. For many people, fully repaying these debts may take several years. However, by starting today, you can turn your financial situation around in a way that will last for years to come.
Review your credit report
A startling number of people have false information on their credit reports that negatively impact their credit scores and credit history. Therefore, it is recommended that you review your credit score on an annual basis in order to ensure that all of the items on your credit score are accurate and true. Contact us for more information about how to review your credit report.
If you have assets that you own, you will be improving your overall wealth and financial situation. An asset is any larger item with value, such as a home loan or car loan. By acquiring these assets, you will be able to improve your financial situation. Contact us today for more information about how buying a car can help to improve your credit score.