Orlando, Florida: Big Tip - Bad Credit Auto Loan Advice That Car Dealerships Don't Tell You

When you have bad credit, you generally end up being an easy sale for a car salesman if he can get you approved. You're also a bigger commission for the salesman. Why? It's simply because people that have bad credit buy with a different mentality than people that have good credit do.

Sounds like stereotyping, right?

Well, it's easy to understand. When you have good credit, the obstacle to overcome is deciding on the vehicle that you want, and then getting the best finance deal that you can. When you have bad credit, the obstacle to overcome is just being able to get approved. When you're in the mindset of trying to "get approved" and then seeing what you can get approved for, you usually buy based on monthly payments, rather than the actual price of the vehicle. You settle for higher interest rates and in many cases, much higher interest rates and car payments than you actually have to pay.

The biggest tip that anyone can give you if you have bad credit, is to get your financing pre-approved outside of a car dealership. If you go straight to a car dealer, you're going to look at some cars, get a credit application filled out and then wait for an answer. Then, the salesman shows you a few cars that you can get approved for.

When you get your financing taken care of in advance, you have the advantage of being able to walk into a dealership with your approval in hand. This allows you to focus on the price of the vehicle, rather than payments. You've already taken care of getting approved and now you simply need to find what you want to drive within your budget, and make offers. The dealer can take it or they can leave it. You are in control. That puts you in the best position to get a better deal.

Also, by dealing with finance companies directly, you can get a lower interest rate. This is because you are able to avoid dealership finance markups. Many people don't know that dealerships actually add interest rate points to your auto loan. That's how the finance manager makes his commission. By avoiding this, you get lower interest rates and lower payments. What could be better?