How to Buy a Car With Bad Credit

February 18, 2007

Memphis, TN - You see the ads all the time. No credit? Slow credit? Bad credit? No problem. There are plenty of car dealerships and lenders out there offering "easy financing" for down-on-their-luck customers.

But outrageous rates and hidden charges can drive you straight to the poor house if you're not careful.

Like most car buyers, Greg Matthews didn't want to be taken for a ride when he went shopping for a new ride.

"I was really nervous," he admits, "because I wasn't sure how the whole process was going to work out...if they were going to try and stick me with something I didn't want or try to overcharge me. I didn't know what to expect."

So before Greg hit the car lot he hit the internet to do some research. And that's the number one thing consumer advocates recommend.

"Pull your credit report," says debt management expert Corky Neale. "Find out how bad your credit really is."

Neale says you should get a copy of your credit report and you should find out what your credit score is before you go car shopping.

"The next thing," he says, "is to arrange financing before you get to the dealer."

Neale says prospective car buyers should shop their loan because while dealerships offer the convenience of on-the-spot financing, he says they often charge higher rates.

You can compare rates at your local bank, credit union, savings and loan or with an on-line lender.

"It really pays to shop for the loan," says Neale. "And again, shop for the loan before you shop for the car."

Randy Hutchinson, head of the Mid-South Better Business Bureau, also recommends figuring out how much car you can afford before you go to the dealership and stick to your budget. And, he says, pay attention to the details.

"We get complaints from people all the time," says Hutchinson, "who didn't understand the contract. A consumer needs to read the contract. If you don't understand it, don't sign it. If it's got any blanks, don't sign it. If it has options you haven't agreed to, don't sign it."

Hutchinson says the interest rate isn't the only thing that can make your monthly note skyrocket.

Look closely at the term of the loan and any special fees or charges.

And beware of offers for extended warranties or loan insurance. The experts say most buyers don't need those options.

Greg Matthews played hard ball and even threatened to walk away from the bargaining table.

Eventually, he drove away with a pretty good deal. His goal now: to watch his credit carefully and drive his new car, "until the wheels fall off," he says with a laugh. "I'm keeping it forever. I've got a little girl to put through college in 18 years, so I have to save everything I can."

Source: http://www.myeyewitnessnews.com