The next step to avoiding bad credit auto loan scams is to determine your car budget. In addition to car payments, this figure should include the cost of gas and full coverage car insurance. By comparing this number to your income after expenses – Federal Auto Loan offers an auto loan calculator that can help you with this – it will help you determine your payment to income (PTI) and debt to income (DTI) ratios. If all things work out well, these ratios should meet the requirements of typical subprime auto loan lenders.
Research the price.
Go online and look at the makes and models that you are considering. If you have a good idea of the price that you should be charged for a vehicle, it will be more difficult for a dealer to take advantage of you. Resources like Kelly Blue Book (www.kbb.com) and others can help you to know the amount you should pay for the car or truck you are considering.
Research interest rates.
You can also research interest rates online to understand what you may be paying in terms of your rate. Remember that bad credit will significantly increase the interest rate you will have to pay. But by researching first, you will have a good idea of the interest rate range you will be in. This way, if a dealer quotes you a much higher rate than the range you were expecting, you’ll know that something may be amiss.
