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Less than Perfect Credit

What to expect if your credit is less than perfect.

Regardless of credit, many people require a car for work. Car loans can be confusing and calculating interest rates and payments can seem daunting, even for people with perfect credit scores. For those with less-than-perfect credit, the only option is sometimes known as a bad credit car loan. These loans are offered to buyers with several stipulations attached, as well as several fees. 

Interest Rate

• Most bad credit car loans will come with a high interest rate. Depending on a buyer's credit, rates can vary from 9 to 21 percent annually. This extreme rate differential can be cumbersome on car payments, as the vehicle depreciates, no real equity is paid off on the car until the end of the loan. Rates such as these can mean paying only pennies on the principal balance each month, and are connected directly with how much of a risk the lender deems the buyer to be.

Down Payment

• Bad credit car loans typically come with high down payment requirements as well. While most car loans can be obtained with nothing out of pocket for qualified buyers, bad credit car loans often require down payments of $2,500 or more. The down payment is calculated on a percentage of the sales price of the vehicle. The higher the price of the car, the higher the down payment.
• • A Good Credit Score is 700 & Above. 

Loan Limits

• Debt-to-income ratios play a big part in any loan. If a consumer's debt load is low, and bills are paid on time, she can typically be approved for a car loan without any major issues. In a bad credit car loan scenario, however, the lender often sets a limit on the loan as well as some other stipulations about the vehicle to protect its interest in the collateral. The limit that the lender sets can also directly impact the percentage of the down payment needed to purchase the vehicle.

Stipulations

• Because bad credit car loans come at a high risk of default, the lender will provide for certain stipulations in regards to the year, make and model of the car. Lenders often do not want a car to be more than two years old, and require low mileage on the vehicle upon loan approval. The reasoning for this is because bad credit car loans come with a high risk of repossession, and the lender wants to secure an interest in the vehicle being resold for a profit. Newer vehicles have a higher resale value, so that must be taken into consideration when applying for a bad credit car loan.

Considerations

• Being in a situation where a bad credit car loan is a must can be a difficult one when taking into account how much money you will lose in high interest charges. It is wise to either have a high down payment or solicit a co-borrower who has good credit. This will help keep your interest rate lower for the term of the loan. If this is not possible, however, try to refinance the vehicle after owning it and making timely payments for at least 12 to 24 months. This can reduce interest and balance the equation of the loan in your favor.

Warning

• Bad credit car loans are normally accompanied by fast-talking car salesmen. Don't get roped into a deal on the first vehicle you find. Make sure you order a vehicle report on every used car to protect yourself against buying a "lemon." Also review the loan terms carefully from the financedepartment at the dealership, and make sure you are not on an accelerated payment or balloon payment car loan, where high payments are due at the end of the term.

Expert Insight

• Before visiting a dealership for a purchase, obtain a car loan from an outside lender. This will allow for you to have your financing completed and provide you with more buying power. Having a check in hand when walking into a car dealership takes the mystery out of how much you can spend, monthly payments and high-pressure sales people. Bad credit car loans can be found online or at your local bank or credit union.

Do your research

As popular as the internet is and the easy access you have to it, you would think more people would use it or do more research before coming to a car lot.

I guess it's kinda like going grocery shopping and in the aisle they put your favorite candy bar or gum to entice you.

But when you go grocery shopping you usually know that if you only got $100 dollars to spend not to over due it.

90% of people want to keep their payment under $300 dollars,  but they don't want to put no money down and want to look at $25k-$30k vehicles. ...that just don't make sense. 

Did we do basic math in school? 

These are people of all ages as well.

Be a educated consumer, but better yet be a good consumer that pays your bills if your looking to borrow money or ask for financing or be pre pared to pay more.

April 2013 Lease Deals

Vehicle	MSRP	Term	Payment w/ $0 Down
2013 Chevrolet Cruze LS	$19,035	36	$199
2013 Mazda3 4-Door	$17,550	36	$200
2013 Subaru Impreza	$17,895	36	$209
2013 VW Jetta S	$17,515	36	$210
2013 Hyundai Elantra	$18,760	24	$236
2013 Subaru Forester	$21,295	42	$237
2013 VW Passat 2.5L S	$23,740	36	$259
2013 Toyota Camry	$24,209	36	$266
2013 Chevrolet Equinox FWD	$25,015	36	$268
2013 Mazda6 iSport Auto	$22,495	36	$268
2013 Acura ILX	$26,795	36	$273
2013 VW Tiguan S FWD	$25,835	36	$277
2013 Honda Accord CVT LX	$23,270	36	$280
2013 Honda Accord CVT EX	$26,195	36	$312
2013 Chevrolet Camaro 1LS	$24,245	36	$315
2013 Toyota Venza	$30,435	36	$327
2013 Mazda CX-9 AWD	$31,375	36	$345
2013 Subaru Impreza WRX	$24,795	42	$349
2013 Toyota Sienna	$32,980	36	$387
2013 Honda Odyssey EX-L	$36,055	36	$398
2013 Infiniti G37 Sedan AWD	$42,355	24	$399
2013 Acura TL	$36,800	36	$414
2013 Cadillac CTS 2WD	$39,990	36	$417
2013 BMW 328i Sedan	$40,845	36	$446
2013 Infiniti G37 Coupe AWD	$46,205	24	$458
2013 Mercedes C250 Coupe	$40,700	36	$473
2013 Cadillac SRX 2WD	$43,405	36	$499
2013 Infiniti FX37	$50,245	39	$528
2013 Mercedes GLK350 SUV	$41,445	30	$539
2014 Acura RLX	$51,845	39	$589
2013 BMW X3 xDrive 35i	$48,295	36	$602
2013 BMW 535i xDrive Gran Turismo	$63,095	36	$682
2013 Mercedes E350 Coupe	$55,425	36	$727
2013 Hyundai Equus	$60,170	48	$739
2013 Cadillac Escalade 2WD	$64,165	36	$790

How much is my payment

The average car payment is $350.

The average cross over or SUV payment is $450.

If you have excellent credit you might pay a little less, but if you got less than perfect credit you will pay a little more.

A good rule of thumb is for every $10,000 you borrow its typically $200 payment.

For every $1,000 down will typically lower your payment about $20.00

Putting money down could make or break the deal from giving you an approval.

It's a good idea to put a 20% down payment