Ruth Caldon asked: Picture this. You need a new set of wheels and you need them in a hurry. The only problem is you don’t have the disposable cash to buy it and you know your credit record leaves a lot to be desired. So what do you do? Resort to grabbing the bus every day or go for an auto loan instead?
Most people would put their hands up at the suggestion of an auto finance loan. It solves all your problems, giving you the cash you need to buy that new car up front, and allowing you to pay it back monthly at an agreed rate.
But hang on a minute – aren’t interest rates for bad credit risks going to be sky high?
It’s a fact of life that someone who is an excellent credit risk is going to get the lowest rates. But it doesn’t work in quite the same way in reverse. It’s easy to assume that the worst credit risk is automatically going to get really high interest rates. But this is where the logical thinking can break down.
The truth is that there are companies around today who specialize in providing competitive car loans for people who don’t have a good credit record. The trick is to shop around and make sure you get the best rate you can.
Some people are surprised at just how much they can do to help themselves as well. For instance, let’s say you are looking to borrow $15,000 to finance that new car you’ve got your eye on. You might find you have the option to spread your repayments over different lengths of time. But this could involve different rates of interest.
Generally speaking you should get a better rate for agreeing to pay the money back faster. You should always be sure you agree to what you can afford of course. There is no point agreeing to a lower interest rate for paying back $300 a month if you can only afford to pay back $150 a month. Always ensure you pick the right loan and terms for your needs.
Another example would be the advance payment you make on your car. If you can put 20% down you’ll get better terms than if you only put 5% down. Crunch those numbers carefully and work out what you can afford to do before agreeing to the terms of any loan. This will help you to get the lowest possible rate for your situation.
Ernest
