You may have heard radio advertisements for bad credit auto finance . Until you’re actually in a situation where you have to finance the purchase of a car even though you have bad credit , you may not ever pay attention to these ads . After all, finances can be a tough subject for many people, especially where loans and credit ratings are concerned.
If you are in a situation where you’re looking for a Barrie car loan, there are some misconceptions that can cost you a lot of money in the long run . Here are 3 of the most popular misconceptions and facts about bad credit car financing :
Misconception : Getting a long term loan will help to save me money, specifically if I have bad credit.
Fact: You will pay an interest rate on any car loan that you finance . This interest rate is usually based on your credit history. The better your credit score and credit history, the better the interest rate (and vise versa). Therefore , you will be paying interest for the duration of the loan. If you get a longer loan (over a period of five or more years ), you will pay a lot more for the vehicle than if you were to get a shorter loan, in most cases. Therefore, try to put as much money down and then opt for the smallest term you can afford.
Myth : If I have poor credit, I will only be able to get approved for an older car.
Fact: There are auto dealers and lenders that will help you afford any type of car that you desire , no matter your past credit history. However, remember that if you have bad credit, your auto finance partner may have a higher risk of taking possession of your car. While you may think you have full ownership of the car once you have purchase it, you might only have partial ownership if you have taken out a loan . If you fail to pay any of your loan payments, the lender may repossess the car . Therefore, some lenders do not care what type of car the borrower buys – if he or she does not pay for it, the lender gets to repossess it.
Misconception : Buying a car through an car finance company can increase my credit score.
Fact: Buying a car with poor credit through an auto finance option will only improve your credit score if you make your monthly installments in full every month. If you neglect to make a payment, your loan could actually further damage your credit by lowering your credit score. When you take out a loan, always repay it in full in order to increase your credit score.
There are many ways to buy a used car . Even if you have bad credit, you can find a car loan in Barrie that will make it possible to get you behind the wheel of the vehicle of your dreams. Just remember that you always need to pay back your loans – especially if you are trying to improve your bad credit through an auto finance option.
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