There are some dealers who abuse the bad credit auto loans by artificially inflating the price of the vehicle and increasing the interest rates. Such dishonest dealers take a car normally sold for $3,000 and inflate the price to $6,000, take $1,500 down and finance the balance at 24 to 26%. Consequently, the under lying debt and price for the car bear no realistic relationship to the value of the vehicle and the borrower is obligated to a contract at a very, very high interest rate. Ultimately he will default on the loan and further ruin his credit rating. If he is able to complete the contract, he would have paid much more than if he had purchased it from a legitimate dealer at a legitimate price.
To avoid getting into such a situation, the borrower must do his homework thoroughly and get complete knowledge of the prices of the cars and try to pay only the wholesale cost-plus a $200 to $500 profit for the dealer. Only as an extreme step should one pay more than the retail price of the car. The watchword here is “caveat emptor,” meaning “let the buyer beware”.
Be Aware Of What Bad Credit Auto Loans Imply
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