How to Buy a Car with Bad Credit

3 Things to Understand When Purchasing a Car on Bad Credit

If you want to buy a car but you have a bad credit, expect the dealer to require you a downpayment. But, if you know how, you can purchase a car without shelling out any money. You just need to understand a few things:

1.) The reasons why a down payment is required
The usual reason why a downpayment is needed is that it brings in additional profit to the sale. Aside from this, it is also needed in order to bring down the entire amount that will be financed for the approval of the lender. If you know the real reason why your lender is seeking for a downpayment from you, then you can work your way to lowering the amount or minimizing it completely.

2.) Your financing options are not limited
Even if you have bad credit, you are not limited to seek your financing from a car dealership. Many people think this way that is why they do not dare try seeking for bank loans. Moreover, settling for car dealership financing is the main cause of unnecessary expense because of the unreasonable finance charges. To avoid this, try traditional loans or other means to obtain cash for your car. You will never know if a bank or other lender will reject or approve you. You might as well try because you may be in for a surprise.

3.) Car dealerships increase their car prices
Everyone knows this and so must you. Not only do they mark up the prices of the car they are selling. They also do this for the interest rate they charge with it. If you seek financing from them, they will give your application to a lender. Then, the lender will give you an offer at a certain rate. Since you have a bad credit, the dealership will increase the interest rate by an average of 3%. The additional rate goes to the dealership as profit. This is not yet accounting for the revenue they already get from the sale of the car without the interest.

Bottom line, you can buy the car that you want without the need to give a downpayment or even despite of your credit standing. You only have to seek for other loan alternatives aside from car dealership financing.

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Auto Financing on Used Car Lots Said to be Predatory

Lawmakers are Setting Strict Rules on Buy Here Pay Here lots

Lawmakers of California are setting strict and new regulations on Buy Here Pay Here lots. This is a category of the used car business that sells cars with high mileage to individuals with bad credit.

Buy Here Pay Here lots are said to be exploiting many people and families because they oftentimes sell cars for prices that are greater than its market value and charge interest of as much as 30% for those who will take a loan for the purchase of the car. Moreover, these used car dealersare also known for their aggressiveness in repossessing unpaid cars in order to resell them again and again.

English: Caerleon Cars, Ponthir Road Used car ...

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The usual customers of this business are those belonging to low-paying jobs that require a vehicle to be able to go to work but cannot qualify for traditional auto financing. Since these car dealers offer their own loans without the need for external financing, they are able to sell their vehicles to those who do not have much choice.

Assemblyman Mike Feuer introduced AB 1447, a legislation that targets some collection and sales practices of Buy Here Pay Here dealers. Senator Ted Lieu and Assemblyman Bob Wieckowski also expressed their plan to introduce different bills aimed at regulating the practices of Buy Here Pay Here dealers. The move of these lawmakers came as a response to the different stories featured in the Los Angeles Times that discussed the practices of this type of used car lots.

Feuer’s bill will ask the dealers to visibly put the price of the vehicle on the car. Moreover, it will prohibit dealers from asking its customers to pay their car in person. Also, the dealers will not be permitted to contact personal references after the completion of the sale. Finally, the dealers are not allowed to install GPS devices or trackers on the vehicles that can shut them down remotely.

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