Article: You want to have as much information going into any transaction as you can.  That way, you will be able to better evaluate any information that you counterpart in the transaction tells you. Therefore, check your credit score and get a copy of your credit report before you even start to visit with lenders. You can get a copy of your credit report at https://www.annualcreditreport.com/index.action.  You can get your credit score directly from the credit bureaus, or from sites like creditkarma.com or credit.com. Try to make plans for your new car purchase several months in advance. That way, once you have read the information in your credit report and seen your credit score, you can take steps, such as making on-time payments and using less of your existing credit limits (try and keep it under 30%), to improve your credit score. If you're buying a car, your bad credit may not be a terrible hindrance to getting a good loan because the term of the loan is short and the car itself is essentially collateral (it can be repossessed if you fail to make payments). Therefore, it is imperative that you shop around. The average borrower with bad credit pays higher rates for an auto loan. If you’re paying much more than that, there’s an excellent chance that you can get a better deal elsewhere. Some dealers write up contingent or conditional contracts that allow them to increase the down payment or monthly payment of your loan. This type of term is extremely unfavorable to the borrower, and will almost certainly be used against a borrower as a pretext for repossessing the car. If a lender inserts this type of clause into the contract, run the other way. While a conventional lender, like a credit union or bank, might give a person with bad credit a higher interest rate than a person with good credit, they will often lend to borrowers with bad credit. Scrutinize dealers that cater to people with bad credit carefully. Those are often the lenders with the least favorable terms to the borrower. Extending the length of your loan may be tempting because it reduces the amount of your monthly payments, but you end up paying more in interest in the long run. This goes double if you are buying a used car. If the term of the loan is too long, you can end up making monthly payments on a car that long ago ceased to be drivable. Some lending contracts require the borrower to purchase extended warranties, aftermarket services and even insurance. If these have been added onto your contract, walk away.
What is a summary of what this article is about?
Check your credit. Plan in advance. Shop around. Read the fine print. Look at conventional lenders first. Focus on finding the lowest APR (annual percentage rate) over the shortest term. Watch out for non-essentials in your contract.