When determining the amount of your monthly auto loan payment, several key facts are taken into consideration during the calculation process. Bad credit can, in fact, affect the amount of your auto loan’s monthly payment. Some of the key facts taken into consideration are the interest rate that you’re eligible for, down payment, trade-in value, and the length of your auto loan. Given below is an explanation for several of these aspects, as well as how bad credit may affect various decisions.
Monthly Car Payment Calculation
The larger the down payment put on a vehicle, the lower the monthly payment has the potential to be. Most lenders prefer a minimum of $3,000 down on a vehicle being purchased by persons with bad credit. If you’re trading in a vehicle, money will be taken off the overall price of the vehicle depending upon the value of the trade-in.
If you trade-in a vehicle and produce a decent down payment, then this will be a huge benefit to you when it comes to your monthly payment, because you’re bringing down the price of the vehicle. The length of your loan will also determine your monthly payments. If you take out a shorter loan, your payments will be higher. If you take out a longer loan, then your payments will be lower.
Does Having Bad Credit Affect My Monthly Car Payments?
Yes, and this is where your interest rate comes into play. If you have bad credit, then you’ll have a higher interest rate, which will result in higher monthly payments. These interest rates are higher, particularly with lenders that specialize in bad credit auto loans.
- However, even with these specialized lenders, they are taking a risk lending to you, because your history shows that you are not faithful with making payments, therefor they compensate the risk by offering a higher interest rate.
- However, with these high interest rates, your ability to pay will be determined also by your income, etc. Many things will be taken into consideration during the lending process. Your lender doesn’t want to put themselves at risk or you by giving you a loan that you will not be able to manage and make payments on.
Learn More: Zero Down Payment Car Loans
How Can a Bad Credit Auto Loan Help My Credit?
- There is a silver lining: consumers are able to use bad credit auto loans to their advantage by not only getting on the road in a new or used vehicle, but by making monthly auto loan payments on time, they will be improving their credit score.
- Always pay your payments on time and you can improve your credit, then in the future if you want to trade in your automobile, you might find yourself a better deal with a lower interest rate.
The dreaded time has come at last. Your high school speedster or trusty pickup has crawled its final mile, leaving you with only one option: buy a new car. Unfortunately, your budget is tight. Economic struggles have recently hit home, not only increasing caution in any purchase, but causing a decrease in the girth of your wallet. Some might even need Bad Credit Auto Loans. However, being the smart consumer you are, you know that simply buying a used car will solve several problems right away. Allow me to explain.
Dialing in Your Car Payment on a Used Car
According to research, a brand new vehicle can depreciate in value as much as 70 percent within only three years. In fact, most of that loss of value happens within the first year. That means that by driving off the lot, the proud new owner is losing up to 15 percent of their vehicle’s value. This can make for a difficult reselling process down the road. By this fact alone it should be clear that buying a used car is a smarter move in the long run, and certainly a more affordable one. Here’s a few tips on how to find that perfect used car.
- Utilize the internet – Used car inventories are made abundantly available online. In addition, private seller websites like Craigslist are a wonderful option for those looking to find an affordable vehicle. The internet is also a smart move for procuring an Auto Loan. Overall, the internet has made car shopping incredibly easy and comfortable. Just grab a cup of tea, a nifty laptop, and a seat on the couch – you’re all ready to go. Bad Credit Auto Loans are also made available online through lenders like Complete Auto Loans.
- Know your budget – Stay knowledgeable concerning how much you can actually afford. This includes monthly payments for a potential loan, a decent down payment for the car, and of course the cost of the car. By taking each of these into account and setting a limit for yourself, the whole process will become less of a risk.
- Test drive – This may seem obvious, but there are several things to watch out for, especially since it’s not brand new. Even if you’re purchasing a relatively new model, be sure to pay close attention to any engine noises, the car’s ability to climb hills, acceleration from a stop, and various braking, cornering, and suspension abilities.
Always remember, should you be struggling with poor credit, Bad Credit Auto Loans are made available through Complete Auto Loans and their unique online services.