One thing can be expected when getting bad credit car financing: it's more expensive in the long run because interest rates are higher than good credit car financing rates are. This is because the worse the credit the car buyer has, the more financial risk they carry for lenders, so interest rates are high to protect lenders while still allowing borrowers funds to buy cars.
In the end, it's still a win to get bad credit car financing, even if you'll pay a lot in interest over time. Here's why.
You can offset some of the interest
You have the power to offset some of the interest by having a larger down payment on your car ready, or by choosing a cheaper vehicle that will take less time to pay off or have lower monthly payments. So, even though you will pay interest, you're not entirely powerless with your options and you can still get a great car without having stellar credit.
Some car payment plans allow borrowers to pay off their vehicle's loans without early payoff penalties. If you choose bad credit car financing that has no penalties for paying off your loan early, you can use a tax return or other cash benefit to pay off your car loan, which eliminates the rest of the interest you would have paid.
You can build your credit
With each bad credit car financing payment you make, you can potentially build your credit. This is great news because it means you're working on building a better credit score and making yourself a financial portfolio that is more responsible, all while getting a great car to drive as well.
Your better credit score will lead to cheaper car financing in the future, better interest rates for personal loans, and can even help you get into a house one day if you are not already a homeowner. In the long run, getting a bad credit car financing loan even with the higher interest rates is very beneficial. Just make sure you make your payments on time every time so you stay on track, and make sure your bad credit financing dealership reports to the major credit reporting agencies.
Compare various bad credit car financing options at your local auto dealership. You'll find that there may be more options available to you than you originally thought and that you don't have to pay outright cash for a car in order to buy one, even if your credit is horrible.
For more information on bad credit car financing, contact a company near you.