Your credit score plays a major part in choosing either a good credit or a bad credit loan. Regardless of the type of loan you choose, you should be able to find a lender that can help you buy a car at a reasonable rate. If you have bad credit however, you need to be aware that you will probably be paying much higher finance charges and interest rates.
The good news is that you can get a better deal on a bad credit loan if you are willing to make a substantial down payment on the vehicle. The downside of this type of loan is that your repayment term is between one and four years which is shorter than the three to five years offered with by good credit loan.
Irrespective of the kind of loan you are considering, you will need to supply the lender or institution with certain documents when applying. The documents that they require are usually a proof of income, proof of residence, bank statements as well as copies of your latest tax returns.
It is a good idea to do some research before applying for a loan. Visit or contact your local credit union to see what the current interest rates are. This will give you better understanding of whether or not the lender is trying to rip you off. If you have a good credit score, knowing these figures can help you negotiate a better rate.
Remember that the better your credit score is, the lower the interest rate that you should try to negotiate. It is always best to first shop around and get preapproved auto loans before going out and looking for a car as this will help you choose the best deal.
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