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.

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.

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.

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.

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.

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.

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.