Buying A Car With Bad Credit

Buying a car with bad credit is like finding cheap car insurance for state of Florida. It's a pain, but can be done.....

It can be tough and it can be scary, just like finding that good Florida car insurance rate. You don’t want to get ripped off and the dealer doesn’t always seem to be on your side. If you're one of the millions of Americans whose credit falls in the lower side of the rating scale, you're facing an even greater challenge. You don't have to be a victim, though. Remember: dealers want your money as much as anyone else’s money, and that gives you a nice bargaining chip.

How “Bad” is my credit anyway?

Lenders rely heavily on your FICO score, a number between 300 and 850 which is supposed to predict how likely you are to repay your loan. How do I get the number? Simple go to myFICOscore.com, straight to the horses mouth. If you don't find out where you fall on the FICO rainbow, you could get ripped off by dealers, who might add several points in interest to the loan’s percentage rate and keep the difference for themselves. Without your credit score, you might think, “well that loan rate must be the best I can qualify for”, when in fact, the dealer has pumped up the loan to a much higher rate than you'd get from an independent bank or finance firm. Pay the money and get the score.

“Is it that bad, really?”

For the most part, scores above 700 are good news, scores in the 600 to 700 range are okay and scores between 500 and 600 mean it’s time to cry.(Just joking, you can get it up) So the bottom line is this, interest rates drop as your score climbs up the FICO rating scale. You may want to be sure that any closed accounts show as closed rather than delinquent. It would be tough to get a loan if you are behind on payments.

Should I use a bank or get dealer financing?

If you can, get a loan before you go car shopping. This way, if you don’t like the dealer the slick salesman is offering, you can act all cool and say, “Later, bro, I’ll take my business elsewhere.” Capital One, Household Finance and AmeriCredit stand out as being particularly aggressive in offering loans to sub prime borrowers, but as we all know, things have changed lately so check out ALL the options. Information is power and you will be able to find something if you put in the time.

On the other hand, virtually any auto dealer you deal with is likely work with you if they want. Mazda, for example, finances vehicles through subsidiary Mazda American Credit, GM dealers have General Motors Acceptance Corp., Nissan dealers Nissan Motor Acceptance Corp. and so on. Search the ConsumerAffairs.com site, and you'll find complaints about overcharging, financing trickery and other ills.

Bottom line: bank loan is best and dealer financing is usually easier to get.

6 things to watch for:

• Don’t drive off the car lot until your financing terms are final. You don’t want to get a call later or letter later with different terms. Trust us.
• No verbal assurances, please
• May want to say no to pre-payment penalties
• Make sure the interested rate is pre-calculated
• Don’t sign up for anything extra. You don’t have to and you don’t need to. Just remember the Florida car insurance example.