Bad credit makes a lot of things more difficult. Maybe you fell behind on your mortgage payments, or maxed out a few credit cards. In any event, you made mistakes, and now you’re wondering if there’s anyone willing to give you a car loan.
Fortunately, there are plenty of bad credit car dealerships in Arkansas. These places will even help you purchase a new car, no matter how bad your credit history is. Interest rates will be higher, but can be more generous than you would expect. What motivates these dealerships to offer great deals to “risky” buyers?
- New cars provide security – A brand new car makes valuable collateral, which makes it easier for dealerships to sell should they be forced to repossess it.
- They want to establish a relationship – Even if they’re taking a large risk and don’t make much money from the deal, the long-term benefits of getting a loyal customer are worth it. They expect you to buy new cars or refer friends and family in the future.
- After-sales is still profitable – You will likely bring in your vehicle for servicing and maintenance at their dealership, which is another valuable source of income for them.
As you can see, it’s still possible to get a great car without paying a ridiculous amount in interest. Prep work is important, though. You should ideally get a credit report several months before you buy a car, so that you have time to fix outstanding issues. Paying off a few debts now can make a significant difference later.
A Warning: Don’t Fall for Poor Deals
Many people with bad credit are happy just to get a car loan. If you drive to the lot without fully understanding the terms of the contract, you could end up paying dearly for it. Verbal assurances don’t mean anything; pay close attention to every term to see if it matches what you agreed on. Make sure that the interest rate is final (rather than subject for approval) before signing anything.
Don’t just take what you can get either; shop around for the best rates, so you can still save thousands of dollars in interest. If a dealer says that 19% is the best that they can do for you, they probably have competition that would be happy to make you a better offer.
Know the market and spend some time looking. Above all, make sure that you don’t buy a more expensive car than you can actually afford. Even if the payments are manageable, who wants to be saddled with a high interest loan for almost a decade?