Things to Beware Of
with Bad Credit Car Loans

The Truth About 100% Approval Guarantees

A Meaningless Promise

Some bad credit lenders and dealers use 100% approval guarantees as a gimmick to get you to apply or visit. This promise is often meaningless.

The Real Cost

To reduce their risk, the lender or dealer will require a large down payment before you can take delivery of the vehicle. If you can’t afford this down payment, they will approve you for a less valuable vehicle, often one with high mileage.

The Bottom Line

These practices can leave you with a car you don’t really want and financial terms that don’t benefit you. Choose lenders who prioritize your needs and offer realistic solutions.

Beware of Lead Generators for Bad Credit Car Loans

The Hidden Risks

Many websites for bad credit car loans are actually lead generators. These companies don’t offer financing or cars. Instead, they collect the personal information you enter on their online applications and sell it to car dealers in your area.

Duplicate Applications

Lead generators often have multiple websites that look different from each other. You might unknowingly send duplicate applications to the same dealers and lenders. This can lead to multiple credit report requests.

The Consequences

Multiple credit inquiries can negatively impact your credit score. Be cautious and ensure you’re dealing with reputable lenders directly, avoiding unnecessary credit checks and potential scams.

Beware of Older and High-Kilometer Vehicles

Hidden Costs

Older vehicles with high mileage might seem like a great deal due to their lower monthly payments. However, these cars often cost more in the long run.

Increased Repair and Maintenance

Repair and maintenance costs are much more likely with older vehicles, which can quickly offset the lower payments and disrupt your budget.

The Risk of Breakdown

If the car breaks down before you finish paying off the loan, you’ll still need to pay for a car you can no longer drive. This situation can create significant financial strain. Aware of with bad credit car loans.

Avoid Long-Term Car Loans

The Trap of Lower Monthly Payments

Dealers may offer long-term car loans to fit a vehicle into your budget by lowering monthly payments. However, this approach locks you into a lengthy financial commitment, often with high interest rates.

The Financial Pitfall

Long-term loans result in paying more interest over time. If your car breaks down or becomes too costly to repair before you’ve paid off the loan, you still owe payments on a vehicle you can’t use.

Smart Financial Strategy

When higher interest rates are unavoidable, aim to pay them for the shortest time possible. Opting for shorter loans or leases helps you rebuild your credit faster. This strategy allows you to upgrade your car or refinance at a better rate sooner. Aware of with bad credit car loans.

Dealers and bad credit car loan websites often ‘shop’ your credit to many lenders – and may even tell you that it’s to your advantage. In reality, it often hurts your credit.

• Too many credit bureau inquiries over time can reduce your credit score.
• To a lender, all these credit inquiries suggest that you’re desperate and have been turned down repeatedly.
• You’re likely to end up with less favourable financing terms if you’re approved at all. Aware of with bad credit car loans