3 Common Mistakes to Avoid When Looking for Bad Credit Auto Financing
At PA Auto Credit, we know choosing a loan can be stressful, especially when you’re applying for bad credit auto financing. If you have little or no credit history, you may feel pressure to accept any financing offer that’s available to you. Before you commit to any plan, take a breath and look over these common mistakes.
Focusing on the Monthly Payment
It can be easy to focus on the monthly payment, especially if you’re trying to make a new car work with your budget. Don’t forget to think about the length of the loan too, though. Predatory institutions might make the term of your loan last for six or more years, which means that you’ll pay much more in interest and fees over its course. Remember the 20/4/10 rule – look for a loan with a term of around four years.
Not Reading the Fine Print
You may think you’ve found an affordable deal, but if you don’t read the fine print, you may be underestimating the price tag. Read through your financing agreement carefully and take note of any extra fees or taxes that you’re expected to pay – they can add up. Drivers who aren’t fluent in English have been shown to receive higher interest rates and more fees, so bring someone with you if you’re not confident in your language skills.
Rolling Over an Old Loan
Rolling your current loan over into your new one can seem like a good way to find your next drive, but it has major financial consequences. Because your new loan will combine both loans, your loan-to-value ratio will be higher than 100 percent, which can lock you out of a good interest rate. And because of the high amount, you’ll probably be locked into a loan for a long time.