When choosing to purchase a vehicle with poor credit you will have to take many things in consideration and one of the most important ones will be to make sure you are getting a great interest rate for you. It is very easy to make mistakes in this step, so it is always best to know what is out there and properly assess you and your situation to make sure that you don't end up paying an arm and a leg on your auto loan interest rates. Even though you have bad credit you should not have to suffer as much as most lenders try to make you think you should.

It may sound like such a petty little thing, but it can save you bundles of cash all by making sure that you get the best possible interest rate compared to what you possibly may have received. Most borrowers do not realize that there will be multiple different kinds of interest even depending on the state in which you live.

Simple Interest Financing

This will be the most common and basic type of interest that is out there. Now we are affiliated with dealerships across the nation anywhere that you look to make sure that people can get financed to buy a car with bad credit. With these loans the interest will be charged daily based on the current balance. This means that it comes with the possibility of you saving money if you become able to pay off your loan early. Also if you are making larger payments than necessary very quickly the amount of interest you are paying will drop significantly. Basically there is nothing but good things to come from paying off your loan early with this type of interest.

Rule of 78s Interest

This is a very uncommon type of interest rate, but it is still out there so it is beneficial to know about. This will be done beforehand and will be added into each payment ahead of time. This means that there will be absolutely no benefit by trying to pay your loan off ahead of time. Typically this will also mean you are spending more money than necessary on your loan. If you know that you are not going to be able to pay off early and are content with the possible results of this though then feel free.

It is possible that you may be signing up for this type of loan and not even realize it, so be sure that you are carefully reading over your loan contract. Many people accidentally think that they are signing up for simple interest, but actually are getting the rule of 78s. Also it is not available in all states so if you are seeking it know that it may not be available to you.

Our Opinion

With buying a car with damaged credit you will always want to know exactly what you are getting into with your interest, so read over everything very carefully. If you are struggling with finding financing due to your credit circumstance, then let FundingWay.com lend you the helping hand that you need. We make it so simple to apply for financing and can get you the best possible loan with the best interest near you in no time at all. All in all we wish you great luck with all that comes ahead for you and your finances!