Unfortunately, having bad credit means that certain lenders and dealers may try to take advantage of you because they think you’re desperate enough to accept any deal. When looking for a bad credit car loan, watch out for these bad credit auto loan traps.
Markups
The most common and probably most obvious of bad credit auto loan traps is loan markups. Your dealer will profit from trying to get you to go for a more expensive loan, stick to your plan, and don’t accept any offer that you can’t afford.
Yo-Yo Financing
This occurs when your dealer permits you to take the desired car home before your loan application has been officially accepted, and then contacts you a few days later to inform you that your loan application has been denied. Knowing that you’ll probably comply with their demands, they’ve now locked you in with a new price and interest rate.
Purchase here, pay here.
You can get a loan from these dealers regardless of your credit history or score. Even though this could seem to be just what you need, some drawbacks could cost you money. Although not all “buy here, pay here” dealerships are unscrupulous, you should do your homework and determine what kind of interest rate you can qualify for in advance because they can try to con you with a ridiculously high one.
Also Read: How To Apply For A Car Loan If You Dont Have Good Credit
