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Dealing With Higher Interest Rates And Down Payments
It's a trend that bad credit holders have to make significant down payments and get a bad credit
car loan at higher interest rate. The down payments can be anything between 20 and 50 percent
and interest rates may range from 5 percent to a whopping 26 per cent. The payments and rates
of bad credit car loans depend on how bad your credit is and which state you live in.
Generally, the interest rate for bad credit car loans should range between 7 and 18 per cent. The
amortization period, which is the time required to pay back the full loan if payments are done
regularly, may vary from 2-4 years for bad credit holders and 5-7 years for good credit holders.
A bad credit car loan can be your chance to improve your credit score by paying off the loan on
time. In certain cases, the lenders of bad credit car loans, in the end, finance the transaction with
any one of the direct lenders. In this way, they lock an outside source of finance either by giving a
guarantee for a portion of the bad credit car loan, or letting a portion of the loan to be left unfunded
until you make a few payments of the loan.
Be Careful Of Scams And Exploitation
Here is a little secret of car dealers being exposed - some of them exploit their clients by
deliberately increasing the price of the car and shooting up the interest rate of bad credit car loans.
There is this case of a lady being duped by a shrewd car dealer. He took a car for $4,000 and
doubled the price to $8,000; took $2000 as down payment from the lady and financed the balance
at 25 per cent. As a result, the under lying debt as well as the price of the car were not related
realistically to the value of the car. Here, the lady was obliged to the loan contract at a staggeringly
high interest rate. What happened finally? Well, the lady defaulted on the bad credit car loan and
further tainted her credit score. Even if she were able to finish off the bad credit car loan contract,
she would have shelled out a lot more dollars than if she had bought the car from a genuine car
dealer at a genuine price.
How do avoid being cheated like the lady in the example? The best way is to do your homework
before signing the deal. Research and compare the car prices and make an attempt to pay just the
wholesale price, along with some $250 to $500 profit for the car dealer.
Make The Most Of Promotions
At times, the car manufacturers and dealers have to reach certain sales targets for new brands of
cars. In this process, you can pick some impressive deals for bad credit car loans. Moreover,
newly launched cars draw lower interest rates and an extended amortization period. In this case, if
you want to get rid of your old car, the payment for buying a new one may be either the same or
lesser than the payment for buying a used one.
Don't be dejected if you fail in the first few attempts at financing or if you have to go for second or
third choice of cars. Improving your bad credit requires a certain deal of patience. You have to
keep on trying and get a bad credit car loan at such a rate that helps you push up your score on
the credit chart.
Bad Credit Car Loans have changed the lives of thousands of Americans who do not have the
advantage of an impressive credit score. Daniel Wesley provides free finance tips and loan
calculators at http://www.creditloan.com
Article Source:
http://EzineArticles.com/?expert=Daniel_Wesley
==== ====
Get the car YOU want - even with little to no credit! Read the ULTIMATE AUTO LOAN
BLUEPRINT now (free for limited time!) and find out how...
http://poorcreditautoloans.info/
==== ====