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1. Buying a car has become easy in the recent
past. Most credit institutions have relaxed their
financing rules to accommodate more people into
the lending bracket. In the past, an auto loan with
bad credit was the preserve of those who had
excellent credit scores. However, the entry of
subprime lenders into the market has made it
easier for people with bad credit to acquire
financing.

2. Lenders work with a number of dealers to
offer financing. When you want to apply for a loan
at a dealership, it is not the dealer who will finance
you. Instead, your financing will come from a
lending company that has an agreement with the
dealer. However, the dealer gets paid commission
for selling the loan. The higher the amount you
apply for, the greater the commission that the
dealer will get.

3. Thus, it is not uncommon to find dealers
insisting that you include add-ons with your auto
loan. For example, the dealer may want you to
purchase auto insurance as you apply for the
auto loan. This will mean greater commissions
for the company but can mean financial distress
for you. Go to the dealership after carrying out
research and knowing the amount that you wish
to apply for.

4. Another thing that the dealer will not tell you
is that the loan may come with other charges.
Nothing could be more incorrect than calculating
the cost of an auto loan with bad credit based on
the interest rate charged only. When you find a
dealer accepting to reduce your rate, it is not yet
time to celebrate. Find out the exact fees that you
are going to pay for the financing. Some car loans
come with high fees that cancel out any gains
made through low interest rates.

5. To know how much a loan will cost, you
need to consider the interest you will pay as well
as the fees. Some lenders may attract you with
low interest but not tell you of other charges that
the loan will come with. It is your duty to find out
the exact fees that you will end up paying for the
loan. These fees are usually indicated in the
agreement for car loans for people with bad
credit.

6. This document is usually long and may be
written with financial jargon. If you do not
understand any of the points in the agreement,
ask the lender. Alternatively, ask the lender to
allow you to carry the agreement home to go
through it. You can then ask your financial
consultant to explain the provision of the
agreement.

7. These fees may seem negligible. However,
when you add them up, you may realize you will
end up spending a couple of hundreds every
month when you have to pay the installments.
Look for a lender who offers an auto loan with
bad credit that has minimal fees in addition to
coming at an affordable interest rate.