Bad Credit No Credit Car Loan – 3 Actions to Watch Out For

Everyone knows that it’s more difficult to get financed for a car loan when you don’t have any credit or you have bad credit. Financing options are out there, but, often, they’re through predatory lenders. This article explains some of the things to watch out for when seeking a bad credit or no credit car loan:

Buy-Here-Pay-Here Car Lots

Buy-here-pay-here car lots can seem appealing when you’re struggling to get approved for a car loan. However, these loans generally come with high interest rates and prepayment penalties. Additionally, most of these dealerships only report to a credit bureau when you’ve defaulted on your loan. The cars are generally used, and the dealership usually charges more than the blue book value for the cars. Buy-here-pay-here financing is best avoided if possible.

High Pre-Payment Penalties

Predatory lenders like to include things in their contracts that make it nearly impossible for you to refinance your loan. One of these things is a high pre-payment penalty. When you refinance your loan, you pay the remaining balance in one lump sum, and, if your contract includes pre-payment penalties, you’ll have to pay that amount in addition to your principal balance. This could keep you from refinancing if you later discover that you’ve entered into a contract with unreasonable loan terms.

High Interest Rates

Even though you have bad or no credit, you should still be able to get a decent interest rate. Because car loans are secured, the interest rates are better than those on unsecured loans. Shop around before signing any contract. Make sure to know what interest rates other companies are willing to give you before choosing one lender, even if that lender swears that you won’t find a better interest rate.

Bad Credit No Credit Car Loan.