Poor Credit Auto

Posted by admin on July 27th, 2009 at 12:00am

Question:
If I was offered a poor credit auto loan with an interest rate at 18.9%, would refinancingbe a good option?
Is refinancing a good idea after twelve months of having the vehicle and after paying the amount on schedule for one full year as well additional debt owed and would that help improve my credit?
Would that be an okay idea? I require a car since my current car is soon to die and I have to get a reliable car.

Answers:
Nothing helps to rebuild credit better then either a poor credit auto loan or a home loan paid as planned for at least twelve months.
Auto financing is actually I do for a job, and I am going to let you in on a small secret: dealers have points on auto loans. The rate that dealer is paying would be most likely approximately two points lower than the rate that they have told you.
An additional thing: many Special Finance lenders determine their rates based on loan to value and if the individual you are dealing with is at all decent, you will owe so much more money on this car then it is worth that in a single year, it will be quite difficultd to refinance.
Keep in mind that on a 60-month loan you will not be in a equity position until month 42 and on a 72 month loan, it is going to be month 54.
I am not trying to talk you out of buying the car, because it will help your credit rating a lot just as long as you pay on schedule. I’m just letting you find otu what your up against.

That interest rate is very high and it is never a great idea to finance a poor credit auto because in the end you will pay much more than what it is worth.

Under Cars and Bad Credit