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Before committing to a bad credit loan for a moped, there are some things that you should consider.
First and foremost is the fact that your credit is going to cost you far more than it would for someone with bad credit. You need to look at the APR and not just the interest rate. The APR or annual percentage rate, is the effective interest rate when you add in all loan fees and charges. It makes it easier to compare different loans because the total real cost is accounted for.
The next thing that you should consider is whether you can actually afford the monthly payment. The cost of a new moped is about 1200 dollars out the door. That can make for a hefty payment. Fit it into your budget and see how things look. Can you make cuts to fit the payment in or is your budget already so stretched that the payment will not fit? Be realistic and if you can not afford the payment, you should turn down the loan, even if you need the moped.
Get A Cosigner
A cosigner can help you get a loan, even with bad credit. When you have a cosigner, you are basically piggy backing off of their good credit. You can get an approval and probably a pretty good rate but there are some things to keep in mind.
Asking someone to cosign a loan for you is a very serious thing. Putting someone on the spot with this request can make things uncomfortable for you and them. These things are best done with a close family member like a parent. If you were to default on a loan, the cosigner would be held fully responsible. It could cause them to have to take on the debt or ruin their credit. This is a big thing to ask of someone.
If you find a situation where a cosigner will work, there are a number of benefits. The biggest benefit is that you will get a fairly good rate. Another benefit is that you can use this loan to build or re-build your own credit.
After 6 months of good payments, you should start seeing improvement to your own credit score. You then can and should refinance the loan into your own name. That will free the co-signer of their financial responsibility which will be a huge relief to them.
Shop The Used Market
We all want something new but sometimes you can save a lot of money going the pre-owned route instead of financing a moped.
In the case of the moped, you can save hundreds of dollars. Many people buy these things only to realize that it is not their thing. You can take advantage of their poor purchases and get your ride for half of the cost of new. If you already had money set aside for a down payment, this is a great alternative.
The easiest place to shop locally is Craigslist but use caution. Always meet the buyer in person, test the moped thoroughly and never put money down ahead of time. Scammers are just part of life when dealing with Craigslist.
Do Without The Moped
Sometimes, if you can not afford a loan or can not qualify for one, you need to simply do without. The good news here is that if you are considering a moped in the first place, you probably live in a very urban or suburban area. This means access to public transportation.
Riding the bus, train or subway might not be as enjoyable or even convenient, but it works. Use the time this affords you to save up and get ready for your eventual moped purchase.
First, open up a savings account and start putting money in it every month. Use the money that you would have been using for your moped payment, minus the cost of public transportation. This money will build quick and you should find that yo have a sizable down payment in a matter of months.
Next, start working on that credit score so that you can get approved easier and for a better rate. Pay your bills on time and try to pay those balances down. Also, get a copy of your credit score and dispute anything that you feel is not accurate.
Wrapping Up
When you have bad credit, it can be tough to secure financing on certain things. Things like mopeds, 4 wheelers and motorcycles are high risk items for lenders. Because of this, your credit is very important and if you are lacking in this department, the loan fees can get high.
If you must secure bad credit funding for your purchase, be sure to shop around and read all of your loan documents. Know what you are getting into before you commit. Remember ,once you sign those documents, it is a done deal.
