Financing a vehicle instead of paying cash can be helpful if you're trying to build or repair your credit. However, you have to make sure that you don't make the kind of car loan mistakes that can end up being expensive in the long run.

Getting a fair selling price on a new or used car shouldn't be that hard if you do some research ahead of time. But, if you blow your decent deal in the finance and insurance (F&I) office, you could still end up paying too much. Granted, if you have imperfect credit, you'll probably face a higher-than-average interest rate. But you should still aim to get the best car loan terms possible for a buyer in your situation.

Car Loan Mistakes that Even Seasoned Buyers Can Make

car loan mistakes
It's never a good idea to blindly head out to a car dealership. Instead, you should prepare yourself for the car buying and financing process by looking up answers to your questions ahead of time. For example, there are a number of good articles about credit and auto financing right here on

When you visit a dealer, you should have at least two things with you: 1) a game plan and 2) any documents that you'll need. When forming your game plan, keep these things in mind to avoid making potentially costly errors.

Know Exactly Where You Stand with Your Credit

Even if you're sure that your credit isn't great, you should be aware of exactly how bad it is. You can have a credit score that is less than 500 or in the 620 range and still technically have "bad" or subprime credit. But there are several different interest rates that might be assigned within this range. And just one interest rate percentage point could make a difference of several hundred dollars in the total cost of the loan.

Even though most dealers play fair when it comes to car deals, never let them tell you what your credit is like. Instead, request copies of your credit reports from TransUnion, Equifax and Experian. You're entitled to a free copy from each of these bureaus every 12 months. Once you have your most recent reports, go over them carefully and look for errors. Any mistakes that you find can be disputed and removed. This could cause your score to go up by at least a few points.

Your credit score is also available through any of these agencies, but you may have to pay a small fee. As an alternative, you can obtain your FICO score, the rating that most lenders look at, by paying a small price at Before paying, though, you should ask your bank or credit card company if they provide complimentary credit scores to their customers. Or, there are several websites out there that will give you a free version of your rating.

Keep Your Eye on the Total Purchase Price of the Car

Consumers who are financing a car with good credit should definitely know the total price of the vehicle before figuring out a monthly payment. This way, it's easier to catch inflated fees or unwanted add-ons.

On the other hand, buyers with damaged credit will probably have to determine a monthly payment first. In fact, this is how special financing normally works. In this type of situation, the lender will want to know how much you can afford to pay every month (with insurance costs included).

Determining a monthly payment amount will likely be a big part of the approval process. But bad credit car buyers can still pay attention to the total selling price. Just like consumers with good credit, they also need to be aware of any hidden fees or unwanted add-ons.

Keep Financed Add-Ons to a Minimum

Speaking of add-ons, it's always best to finance as few of them as possible. This is because you will be charged interest on anything that's rolled into your car loan. So, if you're a bad credit buyer with a higher interest rate, add-ons can get expensive quickly if paid for over the loan term.

Also, subprime consumers should keep their requested loans as small as possible. Less expensive loans require the lender to take on less risk, and this may increase approval chances. And lenders typically won't finance any amount that exceeds the car's selling price.

Finally, any buyer may find that they can get the products offered at dealerships for less elsewhere. Items such as service contracts and GAP insurance may be useful. However, you should shop around for the best price before adding them on at the dealership.

Quick and Easy Assistance for Car Buyers with Bad Credit

Financing a vehicle with bad credit doesn't have to be hard, and Drivers Lane can make the process even easier. We can match you with a local dealer that can work with unique credit situations. In some cases, you may even be able to buy your car with little or no money down.

The service we offer is free and comes with no obligations, so you have nothing to lose. Go ahead and fill out our simple and secure auto loan request to get started today.