5 Practical Car Loan Tips to Help You Save Money

By Angela Monroe - December 16, 2019

If you are thinking of getting a car loan, you’ll want to be as savvy as possible with the money that you spend. There are lots of ways you can save money on your car loan. And this is especially important if you have bad credit.  Car loans for people with bad credit often have inflated rates of interest and charges that seem unfairly high. So it is important to do some research and follow some car loan tips.

Follow these top car loan tips if you’re looking for car loans with bad credit to make sure you get the best option for you:

1. Check your credit rating

This is really important to do before you apply for a car loan. Your credit rating will be one of the first things that lenders look at when they consider your car loan application and they’re likely to base the terms of your loan on your credit score.

Car loans for people with bad credit aren’t impossible to get but they can sometimes be harder. Make sure that your credit is in the best possible state before you make applications for a car loan. If you have recently moved jobs or do not have a fixed address, you may want to wait a few months before you apply.

Knowing your credit rating in advance means that you’ll know where you stand when it comes to getting a car loan. If you know that your credit rating is low, you can expect to pay slightly higher interest rates than with a standard car loan.

2. Consider the amount you borrow

Figure out how to make car loans work for you. You should think carefully about whether you want to buy a new or a used car. A used car will generally require a smaller loan which may be easier to pay back.

It’s also important to remember that you’re likely to pay higher rates of interest on smaller loans. This is because the bank still has to make money on a loan yet with a small loan you’ll often end up paying it back relatively quickly. Generally, if you’re only borrowing a relatively small amount for a car loan, try to ensure that it isn’t under $5000. If you do need less than $5000, you may want to consider a different type of loan.

3. Go for a used car or a cheaper model

When it comes to car loans for people with bad credit, it’s really important that you only borrow the amount of money that you’re able to pay back. Your monthly repayments with a car loan should always be paid back in full and on time. Think carefully about what you can afford to spend and make adjustments if you need to.

Want a high-end brand with extra features? If so you may not be able to buy a brand new version of the car but you could borrow enough to cover a used model. If you are happy with a lower-end brand, you might consider buying a new car but opt for the basic version and avoid adding expensive extras which can really increase your total bill.

4. Read the small print

Car loans generally come with a lot of small print. It’s really important that you read this carefully, and if you don’t understand it you need to ask for help or clarification.

Some of the most important parts of the small print that you need to consider are

  • interest rates
  • fees
  • loan term

Once you understand these, you can accurately calculate exactly how much you’ll be paying back each month. When it comes to car loans for people with bad credit, it can be useful to go for a fixed rate of interest so that you’re always going to be paying back the same amount each month. This will allow you to budget accordingly and make sure your repayments are always paid back in full and on time.

Too many people don’t read the small print and end up spending unnecessary money by getting charged extra fees for late-payments after they realise the additional costs to the loan that the interest adds on.

5. Ask for help

There’s no point in struggling alone to try to save money on your car loan. One of the best things you can do is ask for expert help for some useful car loan tips. Not only does this reassure you and give you peace of mind but it can really help to save you time and money as well as unnecessary stress.

 

At Loans for People with Bad Credit, we have years of experience working with people with bad credit. We can guide you through the process and help you to gain access to our wide range of lenders – all of whom will be understanding and accommodating to your bad credit. We understand the various issues you may have faced getting car loans with bad credit and we want to help you to save money with your next car loan.

Angela Monroe
Angela Monroe is the Community Manager at The Positive Group, specialising in giving people the information that they need when they need it, and putting you on the path to a fair financial future. She has 8 years of experience in helping Australians find the right finance solutions, and regularly contributes articles to empower Australians with the knowledge they need to become financially healthy.

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