Buying Guide - Bad Credit Auto Loans, Auto Loans

Buying Guide

Buying an auto is not easy. we have put together this Buying Guide that will hopefully help you make wise decisions when looking to purchase an auto and finance it with auto loans.

1. How much should I spend when I buy a car?
Your monthly finance payment on a car should be approximately fifteen percent of your monthly income. Evaluate your finances to know what you can afford as a down payment as well as what you can afford to pay per month. Keep this information to yourself, do not share this with the dealer. Research the cars that fit into your range, and narrow down your selection. Use our Car Payment Calculator to help determine monthly payments and what you can afford as a down payment for your bad credit auto loans.

2. Used Cars vs. New Cars
Don't just assume that either a new car or a used car is the right choice. Take a second to match your situation and desires with the advantages and disadvantages of each.

Advantages of new cars.	Disadvantages of used cars.
Warranty: Full factory warranty.	Warranty: May only have balance of factory warranty or no warranty at all.
No potential abuse.	Where has it been? How has the car been treated?
Factory support.	Limited or no factory support.
Lower financing rate.	In general, higher financing rate.
Full range of leasing options.	Limited or no leasing options.
Lemon Law coverage.	Limited or no Lemon Law coverage.
Disadvantages of new cars.	Advantages of used cars.
Higher price.	Lower price.
You take the hit for depreciation.	Initial depreciation has already been taken.
Little price variation.	More price variation (you can always go one year older on a similar car and pay less).

3. Needs vs. Wants
Choose what kind of vehicle you want. Then match your needs, then your wants. Many car buyers do it the other way around and end up with a vehicle that they like on the one hand (it is what they wanted) and hate on the other hand (it doesn't fit their needs). Make a list of features that you absolutely must have (needs), and then make a list of features that you would like to have (wants). Your wants should only be purchased if they fit into your budget. You need to do this long before you ever set foot in a car dealership showroom. Trying to decide which features are important to you while in the dealership will only cost you money and cause you grief.

Examples of Needs	Examples of Wants
4 Doors	Blue car with tan interior (or any specific color)
Station wagon or Minivan	Sport wheels
Automatic Transmission	6 disc CD Player
Air Conditioning	Upgraded interior
Luggage rack	Sunroofs/moonroofs (unless you are really tall!)
Child safety seats	Spoilers/ground effects
Towing package (if you are planning to tow a boat, trailer, etc.)	Engine with more horsepower than you need.
Rear defroster/heated mirrors	Electronic gauge package

4. Prepare Your Finances
When looking to finance an auto, it is VERY important to run a complete credit check. You want to eliminate the possibility that there might be errors present that could harm--or stop--your bad credit auto loans. You can get a FREE copy of your credit report by clicking here. Also, did you know that applying for car loans you can't qualify for could put more bad marks on your credit. If too many potential lenders have checked your credit, others will wonder why you're suddenly trying to increase your level of debt with every finance company in town.

5. GAP Insurance
GAP insurance covers the difference between what you owe on a car and its actual value, should the car be "totaled" or stolen. When you get auto loans, the dealer will most likely suggest you purchase GAP insurance, which can cost up to $500. If you think this situation is likely, then your auto financing plan is probably too long. Whether you need GAP or not, be wary of how dealers try to sell GAP. Dealers may insist the only way to give your auto loans is if you purchase GAP insurance-this is untrue. When negotiating bad credit car loans terms, be sure to ask if GAP insurance has been added to the cost, as the dealer may not tell you.

6. READ EVERYTHING!
When finalizing a new or used car purchase, make sure that you READ EVERYTHING BEFORE SIGNING, including all of the fine print! Decide in advance if you need a warranty, and don't let any "dealer extras" or additional charges slip by. Click the link to apply for auto loans.

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