Four Tips to Get the Best Auto Loan on Poor Credit

If you have a poor credit, it does not necessarily mean right away that you cannot purchase a car or get an auto loan. Just like other things, the degree of “poor credit” can differ from one person to another. For instance, if your credit score is in the middle or the average, a few lenders may still consider giving you a loan, but others who have a different measure will probably consider it a risky action.

According to senior consumer advice editor of, Phil Reed, since several auto loans have a rate of 18 percent and 20 percent, it is important to look around different lenders. Moreover, Jack Tracey, executive director of National Automotive Finance Association, agreed that looking around is important.

Tracey added that it was more difficult to get a nonprime auto loan in the early months of this year and in the latter months of the previous year. The following are four tips in looking for the best subprime auto loan.

First, consumer attorney Yvonne Rosmarin said to have a companion when looking around. Besides having another set of eyes and ears, your companion can also act uninterested or doubtful of the loan terms.

Second, according to Van Alst, get a loan with the lowest annual percentage rate and short period of time.

Third, senior researcher for the Center for Responsible Lending, Josh Frank, said that there are lending contracts packed with unnecessary goods and services and nonprime buyers usually come across these. Frank added to never let the loan be subject on buying add-ons, like extended warranties, after-market services, or insurance.

Fourth, when financing through a dealer, check that the terms are final and not conditional. In some cases, buyers are informed after days or weeks that their monthly payments or deposit has become higher. Based on an April 2009 survey conducted by the Center for Responsible Lending, one in every 22 buyers or one in every nine buyers with poor credit is a victim of this so-called yo-yo sale.

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