For Car Buyers with Bad Credit (Car Buying Tips)
Profit on Financing
For those with bad credit, I do have to give you a warning about financing through car dealers. You have to understand that the car dealers will be seeking to make a profit from you. If they do secure a lender, they are going inflate the interest rate they found for you by adding an additional 2% to 5% to it. Yes, that means, if they found you financing at a 10% rate, they could give it to you for as high as 15% and you would never know it. This is something like a finders fee. The dealer might just say its profit on the financing. Either way, it's not good for you.
Spot Delivery Scam
In addition, you may be a likely candidate for the spot delivery scam. Some of your financial applications will have the words, “Subject to loan approval.” With this scam, the dealer may call you a week or two after you’ve taken possession of your car saying that your loan was not approved at the original loan rate. They will make you bring back the car and on top of that, they will likely say that your trade-in vehicle was already sold. Finally, they will tell you that they found a lender at a higher rate. Your payment might go up a little, but you were left with no real options and you’re hardly in the position to be picky about your options since you have bad credit.
Do Not Take Delivery of Your Car Until Financing Is Approved in Writing
You can avoid this scam by taking possession of your car once the financing is approved in writing. It might mean waiting an extra day or two before you can drive you new car home, but it will help you to avoid a costly scam.
This was adapted from The Car Buying Bible, a 162-page car buying guide full of car buying tips. You may want to visit The Car Buying Bible's online car loan calculator. With both a traditional calculator and a reverse calculator, you can find the payment for the amount borrowed or the amount you can borrow for the payment you want.
For those with bad credit, I do have to give you a warning about financing through car dealers. You have to understand that the car dealers will be seeking to make a profit from you. If they do secure a lender, they are going inflate the interest rate they found for you by adding an additional 2% to 5% to it. Yes, that means, if they found you financing at a 10% rate, they could give it to you for as high as 15% and you would never know it. This is something like a finders fee. The dealer might just say its profit on the financing. Either way, it's not good for you.
Spot Delivery Scam
In addition, you may be a likely candidate for the spot delivery scam. Some of your financial applications will have the words, “Subject to loan approval.” With this scam, the dealer may call you a week or two after you’ve taken possession of your car saying that your loan was not approved at the original loan rate. They will make you bring back the car and on top of that, they will likely say that your trade-in vehicle was already sold. Finally, they will tell you that they found a lender at a higher rate. Your payment might go up a little, but you were left with no real options and you’re hardly in the position to be picky about your options since you have bad credit.
Do Not Take Delivery of Your Car Until Financing Is Approved in Writing
You can avoid this scam by taking possession of your car once the financing is approved in writing. It might mean waiting an extra day or two before you can drive you new car home, but it will help you to avoid a costly scam.
This was adapted from The Car Buying Bible, a 162-page car buying guide full of car buying tips. You may want to visit The Car Buying Bible's online car loan calculator. With both a traditional calculator and a reverse calculator, you can find the payment for the amount borrowed or the amount you can borrow for the payment you want.
posted by Brian at 12:41 PM
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