This Is How Bad Credit Can Double The Cost Of Your Next Car
“The one question to never answer at the dealer. “How much do you want to pay a month for your car?” This is where they really get you. And by get you, I mean that they sell you a car that you really shouldn’t be buying, given the amount of interest you’ll need to pay. The dealer has every incentive to lengthen your loan term as much as possible; the longer you’re making monthly payments, the more you’re paying in interest. For someone with bad credit, and a 14.99% rate on their car loan, here’s how a longer term lowers your monthly payments, but costs you so much more in the long run.”
When you go to a car dealer to buy a new car, unless you have enough cash to pay for it outright, they’ll always do a credit check in order to offer financing. If your credit score is great, you might get a rate as low as 1.99%, but if it’s less than great, it could be significantly higher. Rates ranging from 4.99% to 14.99% might still seem reasonable, but over the span of years, those extra percentage points can mean thousands or even tens-of-thousands of extra dollars spent in interest. The dealer will try to get you to tell them “how much can you pay per month,” but what you should be negotiating for, other than price, is for every single fraction-of-a-percent you can on your interest rate.