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Specialists Give Tips to Bad Credit Car Loan Applicants

By Sally Maison
Published: Monday, November 30th, 2009

Car loan applicants who are struggling with their finances are advised against applying for an auto loan. Those who have poor credit scores are urged to improve their rating first to get better deals.

Specialists Give Tips to Bad Credit Car Loan ApplicantsSpecialists remind consumers that their credit ratings are affected every time they apply for an auto loan, almost always, in a negative way. They add that this is especially true for the FICO credit score of consumers, a rating model developed by Fair Isaac and Company. Shopping around for the best deals available is the most advisable thing to do but too much shopping could hurt consumers in the long run, they explained. This will make the financial lives of bad credit consumers more difficult. Consumers who think that now is the right time for them to have their own car are advised to limit their auto loan applications to two or three.

Since multiple inquiries can hurt a credit score, specialists advise consumers to do their applications in the same week so they will count as one inquiry. If they do not want a deal or if they believe that they could get better deals, consumers are advised not to hesitate in walking away.

Dealers know that consumers have many options, especially a loan applicant who has a high credit score, so they would most likely be willing to throw away better deals just to get a client back in the door. Industry specialists say consumers can expect a call two days after walking away from a car dealer. If are not contacted within the period, then it is time they look for another dealer. As the economy starts to show signs of recovery, experts note that automakers are beginning to increase production, giving shoppers more options to pick from.

Consumers who do not have a strong credit score are expected to qualify to higher interest rates. It could start from 15 percent or greater. In such cases, consumers are urged not to add extras like VIN number window etching, extended warranties, and paint protection. Specialists explained that car owners can get those additional items from other companies without paying 15 percent more. They add that private auto upgrade companies do not look into the credit score of car owners, especially if they are paid in cash.

Finally, industry specialists warn consumers about advertising costs which dealers usually charge on their buyers. Many dealers make their clients pay for their advertisement costs without informing them. Consumers are advised to ask for a list of everything they are charged for and see if they are being charged for high extras which have nothing to do with their car.

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