Bad credit. It can be a real hassle when trying to buy a car. Banks and lenders will say “no” more often than they say “yes.” Many people rush into buying a car with a bad credit car loan that ends up costing them more in the long run. So here are the top 5 mistakes people make when buying a car with bad credit history, so you can avoid them.
5. Didn’t save enough money for the entire purchase
Many people purchase a car with bad credit thinking they need to save the bare minimum for the larger than normal deposit you’ll need to put on the car. This is a common mistake. You should have enough money saved not only for the deposit, but stamp duty, registration and insurance. Only then should you consider buying.
4. Applied for too many loans, too often
Applying for loans and getting rejected over and over reflects poorly on your credit rating. If you already have bad credit and know it, you should be shopping around for favourable deals without actually applying. Once you find a good bad credit car loan lender that suits your budget and needs, only then should you apply for an approval.
3. Didn’t set realistic expectations
Bad credit holders often have their hearts set on flashy cars that are out of their budget. You have to accept the fact that you will be paying a higher interest rate with higher than normal monthly repayments. Your budget must also factor in insurance, servicing, repairs, fuel and other additional costs.
2. Didn’t negotiate the best price
Sometimes people with bad credit don’t negotiate the best possible price on the car they intend to buy. They end up paying thousands of dollars more than they really needed to. If you’re unsure about haggling, take a friend or family member who is more impartial. If you can, find someone that has some experience in dealing to get the best price you can.
1. Didn’t check credit history for mistakes
One of the biggest mistakes people with bad credit make is not checking their credit history. By checking it, you can see if it could be improved. The mistakes in your credit history need to be fixed by you and you alone. Sometimes correcting inaccurate entries on the report is good enough to bump your bad credit up into a more favourable light.
About the Author:
Bill Tsouvals is the founder of Savvy Finance, which offers personal and business car finance and insurance in Australia. For more information visit the website www.savvy.com.au