Auto Finance
Used Auto Finance with Bad Credit

Are you thinking about financing your next car? Walk with caution because any bad step that you could cost hundreds or even thousands of dollars. Do not let the bright new paint of a car overshadow your financial vision. Consider these five points.

1. You are looking for a car and you want to obtain a financing plan. It is easy to focus only on the car you want to buy, but in reality, you are buying both a vehicle and the financing plan to pay for it. If you combine the two aspects, you are prone to pay too much. Auto loans can come from dealers and banks, savings cooperatives and financing companies. The best practice is to compare prices and wait to be approved for a loan before setting foot in the dealership.

2. Shorter deadlines, bigger benefits. It might sound like a temptation to choose a loan that offers a low monthly payment and extend it for a long period, maybe six or seven years, but that strategy is far from being a profitable option. Because of the accruing interest, those who accept a longer period to repay the loan could pay thousands of dollars more for the same amount borrowed than those who opt for shorter loans. In general, short terms offer low interest rates as well. Experts advise financing for the shortest period possible. Think better in four or five years instead of six or seven.

3. They reward those who have good credit. Your credit rating offers an idea about your credit history and indicates the level of risk that financial institutions can expect when lending you money. If your credit score is low, (which indicates that you could be high risk) you will pay higher interest and you may need to pay an initial payment, or lower payment, to give the lenders more peace of mind. If your score is high, you will have access to the best financing options in the market, and possibly with advantages such as financing with 0%. It is best to know your credit score before seeking alternative car financing and you will have enough time to improve your score or correct possible errors that you find on your credit report.


  1. Initial payments lead to savings. When financing a car, a large down payment can hurt your pocket at first, but it is a benefit in the long run. Vehicles depreciate and without realizing it you could owe more for a vehicle. Your monthly payments will be lower if you give more money as a down payment. Exchanging an old vehicle also helps lower the monthly fee. Just be sure to negotiate your exchange apart from the purchase price and financing package.5. Good mathematics exceeds a “good offer”. The companies offer many attractive incentives, including cash reimbursements and 0% interest. But how can you identify what is the best offer of all? Do not guess, do the calculation. For example, compare two loans of $ 20 thousand for 36 months. One includes 0% interest, while the other offers a rate of 6% and a refund of $ 2 thousand. Financing with 0% sounds like the obvious winner but the refund is really the best offer, as long as all other factors are equal for both offers. In other occasions, an offer with 0% interest could be better and that is important to calculate the differences.