Dear Consumer Ed:

I am shopping for my first car.  I can’t afford a brand new car so I’ll be looking for something used. Also, my credit is not so great because I was late on some credit card payments.  How can I make sure I get a good deal on financing despite my low credit score?

Consumer Ed says:

If your credit score is low, some lenders may refuse to give you a loan, and those who do grant you credit may not extend you the lowest interest rate available.  There are legitimate lenders and dealerships that will charge higher interest rates to people with bad credit. However, there are also some dealerships who seek to take advantage of consumers like you by charging sky-high interest rates.  So, before you even begin visiting dealerships, you should shop for a loan.  You can probably get a better deal on financing through a financial institution, so start by contacting several banks and credit unions to see what loan terms they can offer you.  Credit unions often offer lower rates than banks. 

While it is important to try to get the lowest interest rate you can, you also want to ensure that you are buying a quality vehicle from a reputable seller or dealership.  So once you have found the lender who offers you the best loan terms, start shopping for a dealership.  You may want to speak to trusted friends or relatives who have had a positive experience with a dealership.  The Better Business Bureau’s website ( rates businesses and shows whether there have been any consumer complaints against them.  Finally, check the car out thoroughly before you sign any paperwork.  Go for a test drive, run a vehicle history report, and most importantly, have the car thoroughly inspected by your mechanic. Also, make sure the dealer puts any promises and warranties in writing because once you sign a contract, the deal is final.

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