When it comes time to purchase your vehicle it’s easy to get caught up in the emotional feeling of wanting the car of your choosing. You feel as if you’ve found the right car for you and if you can’t have that vehicle you won’t know what to do, but this car is at a lot which has a huge banner on the top that says “buy here, pay here” or “all credit is approved”. This should serve as a warning, especially if you do have bad credit, of a place you don’t want to do business with, but many of us do.
While there are still many used car lots that do business the right way and plan to work with their customers, there are just as many that are like vultures circling your car while waiting for you to make a mistake and miss your payment due date by even a couple weeks and then swoop in. These used car lots often don’t give you any leeway and will take your car regardless of where you are with it and what your situation is, which makes it difficult for you to truly enjoy the car you’ve purchased.
Even if you’re conscientious enough to pay your car payments on time, every time, you’re more likely to pay a lot more for a car from one of these lots than from a dealer that has both used and new cars on the lot. The interest rates on used cars from less than reputable dealers can range from 19 to 29 percent easily and when you consider the markups and add-ons there’s a good chance you could pay three to four times what the car really was worth to begin with by the end of the loan.
Unfortunately over 25 percent of the loans in the US are now of the subprime variety. These loans fall into the categories described which are the higher interest loans and aggressive tactics when it comes to repossession. A vast majority of these subprime loans were processed at these “buy here, pay here” lots and cost customers more money in interest payments than their vehicles were originally worth to start with.
A good explanation as to why you shouldn’t enter into a subprime loan is given in the video linked below. John Oliver explains how bat it can get with his latest episode of Last Week Tonight which you can enjoy watching.
The moral of this story is you should make sure you read the fine print and avoid being pressured into an auto loan. Keep in mind the cost of your vehicle will not only include the payments, but the fuel, the maintenance, the insurance and the taxes that you have to pay in order to keep driving on the roads. Once you take all these factors into consideration it’s important to pay as little interest as you possibly can on a vehicle when you take out the loan. You can learn more about the dangers of auto lending by watching this video.
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