Common Financial Mistakes that Can Affect Your Chances of Getting Bad Credit Auto Loans

1. December 1, 2017 Common Financial Mistakes that Can Affect Your Chances of Getting Bad Credit Auto Loans Nowadays, owning a car is not only a symbol of freedom and independence, but a necessity for everyday life. Despite its importance, however, reports are saying that buyers are finding it hard to get loans to purchase cars. Even worse, people with bad credit are having a tougher time when they apply for loans due to the higher prices of vehicles today. Add to that the mistakes uninformed buyers often make, and it’s almost too difficult to get a new ride. Page | 1

2. Still, car ownership is not entirely impossible. You just have to be aware of the financial pitfalls when applying for bad credit auto loans. Going Over the Budget If there’s one thing auto dealerships will often remind you of during the buying process, it’s that you should only buy what you can afford. Be realistic about your financial situation and ask your dealer’s help to find a car that will match it. Set a price range for the loan and the monthly car payment, and make sure that what you have left over will allow you to still live comfortably. Skipping Pre-Approval Too often, people with poor credit assume that getting pre-approved would do little to help them because of their already dire situation. You’d be surprised at how much more helpful a pre-approval letter is when you walk into the showroom. The pre-approval process analyzes your income, expenses and credit score, allowing you to learn exactly how much you can borrow. This way, you would know how to avoid deals with an interest rate higher than what you can afford. Selling the Old Car Don’t be quick to hand off your old sedan to just any buyer who comes along. You might get more use out of it to help you with financing your new car. Provided that your car is in good condition and considered to have a fair value, you can trade it in instead. Some dealers will accept trade-ins to help bring down your initial down payment. But don’t rely solely on trading in if you want to make monthly payments lighter on your wallet. Putting down as much money as you can will go a long way in paying off the loan. Settling for Used Cars If you’re buying a car on less than stellar credit, you might as well get a new one. Many people might not know it, but loans for pre-owned vehicles tend to be more expensive. You also have to take into account the future maintenance costs of a used car. You should not completely dismiss this option, though. If you do find a good deal on a used car, at least consider adding it to your shortlist. Page | 2

3. Getting a Long-Term Loan You might think getting a long-term loan is thriftier, but it’s actually quite the opposite. Loans with longer terms usually come with a higher interest. A shorter-term loan is a wiser option if you want to save money. Generally, anything you can do to pay off the loan quicker is good. Don’t be reluctant to make additional payments when possible so you can reduce interest. Buying a car with poor credit can certainly be challenging, but making smart decisions will help you. Working with a reputable dealer also simplifies the process. About McLoughlin Chevrolet McLoughlin Chevrolet is a Portland and Milwaukie-based car dealership serving the Oregon area. We offer a wide variety of brand new and used Chevy and GM cars. We also have financing professionals that can assist buyers in finding their ideal vehicle. Sources: 7 Simple Steps to a Subprime Auto Loan, Edmunds.com How to Buy a Car With Bad Credit in 2017, Credit.com Page | 3