Bad Credit Car Loans
To understand how to shop for bad credit car loans you must fully understand how a car loan usually works, how car loans differ when bad credit is involved, and key variables you should be aware of to get the best car loan.
Terms Of Auto Loan
This means the length of time you have to bay off loans. It’s common to receive auto loans for 36-48 months with used cars that are between $10,000 and $18,000. You should decide the length of you loan based on the mileage and speed of vehicle depreciation. This will allow you to have good equity in a vehicle in case you would like to trade your vehicle in after building your credit through making on time payments or choosing to refinance.
Some cars that depreciate slow and hold their value include Honda, Toyota, Audi and Volkswagen. Cars lose most of their value within the first three years so look for vehicles that are between three to six years old
Used Car Down Payment
The higher you’re down payment the better off you are long term due to your interest rate (APR) loan. Also a substantial down payment increases your odds of getting approved for a car loan. It’s ideal to pay 10%-20% down and make sure the car you purchase doesn’t go over 20% of your income. If your making $50,000 per year your car should be financed for around $10,000. It should also be noted that if you’re a family combine your incomes to determine how much you are willing to have financed on your bad credit car loan. A family with a take home pay of $80,000 per year should look to purchase a car around $16,000.
What Is Annual Percentage Rate (APR)
There are two types of annual percentage rates. They include nominal and effective APR.
- The nominal APR is the simple-interest rate (for a year).
- The effective APR is the fee plus compound interest rate (calculated across a year).
Majority of the times dealerships use nominal interest rates as a FYI. As a consumer with bad credit you should expect a high interest rate loan around 15%-18%. To put that in perspective consumers with 700+ credit scores receive interest rates of 6.8% and sometimes lower. Look at purchasing a car as an investment. Car Credit Nation takes on risk to give buyers bad credit car loans through giving you the chance to rebuild your credit and grow in your professional life. Anything worth having takes time. With discipline, persistence, and on time payments you will be able to build your credit and gain control of your financial future.
Your credit score is the equivalent of your social security number but for your financial identity. There are three credit bureaus, which consist of Transunion, Experian, and Equifax.
Please refer to CreditKarma.com to check your credit score today free of charge. If your credit score is below a 600 consider getting a bad credit car loan here at Car Credit Nation.