Important thing on used or new car financing for bad credit

CarLoans - Buying a car is no simple decision. From buying outright, to buying a car on finance, there are many options. You also have to consider running costs. In fact, it’s probably the second most expensive thing you’ll buy after a home. The average loan rates for new or used cars and trucks have risen by almost a quarter of a percentage point. If you have reasonably good credit, you can probably pay less than average for a car loan, but why if you have bad credit record.

Altough that bad credit doesn't mean you can't buy a car, and doesn't automatically mean you can't get a car loan with terms that don't break your monthly budget. Like everything else, "bad" is a matter of opinion and degree. If the score is borderline, some lenders might still smell a good prospect while others, with slightly different criteria, would see more risk. So it’s important to make sure you get the best deal on you used or new car financing.

When interest rates are so low, it’s likely that your savings will not be earning much in a bank or building society account. So rather than keeping your savings and borrowing at a higher rate of interest, you could use them to fund all or some of the cost of the car.

Remember:

• You should make sure you have enough savings left over for an emergency after you have paid for your car.
• If you don’t have enough savings to buy the car outright, you could use them to give you the biggest deposit possible.
• Even if you use money from your savings you may be better off buying the car on your credit card so you benefit from credit card purchase protection. You should pay the bill off in full the next month.

The type of car finance deal is a variation on hire purchase and tends to result in lower monthly payments. Instead of paying for the car outright, you agree to pay the difference between its sale price and its price for resale back to the dealer. This is based on a forecast of annual mileage over the term of the agreement. Payments are spread over a shorter term of 12 to 36 months.

The important thing about you car financing is to make sure the loan is not secured against your home. Otherwise you will be putting your home at risk if you failed to keep up with repayments.