You must have cash on hand to fully purchase a vehicle. If not, then you will most likely need to get financing from an auto finance company, auto dealer or private lender. In some unfortunate situations, auto dealerships are known for offering their customers predatory loans with very high rates of interest. This affects those who have bad credit or low credit scores. It also affects consumers who are not savvy auto loan shoppers. You must know how to shop for the best car registration loan and not be stuck with subprime car loans or you will spend a good time trying to pay it back.
You may want to know what all the hoopla is about predatory lending. Glad you asked. When an auto dealer uses unfair or deceptive means to originate an auto loan, this is considered predatory lending. During the 2005 economic crisis, predatory lending in the mortgage industry became a huge problem, but car buyers also were faced with the same struggles, only not on such a public forefront as mortgage buyers were. A reform was initiated and signed into law by the Dodd-Frank Wall Street Reform and Consumer Protection Act, but this oversight did not include the auto finance industry.
You can protect yourself from predatory lending in more ways than one. Don’t leave yourself open to being taken advantage of by a shady car dealer or you could end up with a delinquent auto loan, which would subsequently damage your credit even more. Many consumers are caught in a situation where their credit is bad and they have few options to buy a car expect through predatory lending means. This is especially true if the person is unsuspecting of the lending laws. The government has pushed to prevent this, but until it is squeaky clean, consumers have to do what it takes to avoid this.
Avoiding the Predators
If you are worried about being victimized in predatory auto lending, it is very important to be armed with the various ways that you can avoid this dilemma. First, it probably is best to get your bad credit repaired, if you can wait for an auto loan. If you really need a vehicle financed urgently and want to avoid bad auto loans, then you must do business with a reputable auto finance company.
Conduct Extensive Research
Once you find a reputable auto finance company, don’t just jump into the loan. Conduct an extensive research of the company. Find out what the company offers financially and discover other consumer’s experience with the company. Contact the Better Business Bureau to learn more.
The Value of Your Credit Score
Predatory lenders can take advantage of you when you are not aware of the value that your credit scores have. It is best, then, to check your credit scores prior to approaching a lender. Research the score you would need to get the lowest interest rate.
Personal Financial Power
Don’t be pressured into signing any auto loan contract, if you are not at all comfortable about it. Take someone along with you that you can trust, but always remember that you have the personal financial power to walk away from the deal.
The Bottom Line
Once you do your research and you feel confident about your credit scores, you can approach a lender and get the auto loan of which you are entitled. Be careful about your final decision and always ask questions where you are uncertain.