Are You Getting A Good Buy Here Pay Here Deal?
It can be tough to find a good deal on a used car – especially with bad credit. Left and right you might find denials, terrible deals, and high interest rates – and for these buyers, the process can be confusing and disheartening. There are usually plenty of options, but few seem to meet the needs of consumers with bad credit histories or less-than-stellar financial situations. Luckily, there are buy here pay here dealers in Cincinnati who are readier than ever to get you a great deal on a used vehicle.
But with a lot of misconceptions swirling around regarding the buy here pay here industry, even the most experienced car buyer might still walk away from a dealer confused as to whether or not the deal they struck was a good one at all. Since we’re not all expert financial analysts, here are some basic tips as to what one should look for in a good buy here pay here vehicle financing deal.
Here’s a look at some of the basic dos and don’ts to keep in mind when it comes to hunting for a quality car financing deal, and some of the best ways to make sure your buy here pay here experience goes the right way for you.
Interest Rates
Probably the most important – and easily one of the most overlooked – aspects of a car financing agreement is the interest rate, or how much you’ll be paying per year just to have the loan in the first place. Generally, for a new car, a standard interest rate should be right around 5 percent – a decent chunk of change when all is said and done, but fairly manageable for the average buyer and sure not to tack on too much compound interest to your overall total.
For some dealers, however, rates might be a little higher – and that’s not always a bad thing. Many buy here pay here dealers charge higher interest rates than standard dealers, if only because the barrier of entry for a buy here pay here loan is so much lower than a traditional loan. When customers with low or bad credit ratings look to take out a loan, they should expect higher interest rates – which makes sense, since the dealer needs security on the loan given. Just make sure to watch out for exorbitant rates – try to keep your interest under 15 percent for just about any deal, and keep an eye on your state’s local laws for guidance on how high interests rates can legally be set for your type of loan.
Down Payments
Many buyers might be scared off by a high down payment, and this is totally fair – even if that fear is a little misplaced. While nobody likes to see a large chunk of their money gone all in one fell swoop, paying a higher down payment can actually save you hundreds of dollars in the long run, since it will be that much less to pay interest on. This may not seem like much of a saving initially, but taken over the entire course of your loan this interest-free payment could save you much more than you would have spent otherwise.
Monthly Payments
Probably one of the biggest traps a consumer can fall into is opting for low monthly payments in favor of higher interest rates or a low down payment. This might seem like an attractive offer in the short term, but it’ll mean that you’ll be carrying your loan for a lot longer – which usually means more money paid towards interest rather than the principle. For sure, having low monthly payments can be a serious benefit and even a necessity for many consumers, but if you can bite the bullet and pay slightly more to cut a few months off of your loan, it’ll be worth it in the end – and it’ll probably save you a few hundred dollars to boot.
Paying Early
Nobody wants to carry debt for too long – not only is it a regular drain on your income, but it can also drag out your credit recovery process far longer than you’d like. That’s why it can be a great idea to pay off large portions of your loan ahead of time – whether it’s from a sudden bonus at work or some other windfall of cash. Putting a large sum of your money toward your principle can shave off months of interest payments, and essentially has the same effect as making a second down payment on your vehicle. Just make sure to check your agreement’s fine print – some dealers throw in early payment fees that could end up costing you more than you’d save on interest. Try to avoid these fees if you can, or see if you can negotiate a deal with your lender when the situation arises.
Reporting Your On-Time Payments
Of course, few benefits come more readily to buy here pay here borrowers than the sweet feeling of a credit score in recovery. Taking on debt, paying it back on time, and being responsible with your borrowing can have a hugely positive effect on your credit score, and a buy here pay here loan is often one of the best options for bad credit buyers looking to boost their credit report. But it’s critical to make sure your lender is actually reporting your payments to the nationally-recognized credit reporting agencies like Standard and Poor’s (S&P), Moody’s, and Fitch – otherwise all those on-time payments won’t mean a thing for your credit report.
So whether you’re a longtime believer in the benefits of the buy here pay here system or are simply looking for a good way to both get a car and recover your credit score, few industries are better equipped to help you. But if you are thinking about hopping on the buy here pay here train to a better financial destination, it’s important to know the right route so you don’t get lost along the way.
Consider these pointers and take your newfound knowledge with you on your quest for a quality buy here pay here dealer – and when the time comes to settle for a great deal, don’t forget that McCluskey Automotive has been working to help buyers with bad or low credit get the car they need for years. You too can benefit from the McCluskey advantage – and get that ride you’ve been dreaming of in no time flat.
