Consumer Car Buying Advice Blog

If a recent economic event such as change in employment, large medical bills, divorce, or legal troubles has turned your good credit to bad credit you can regain a good credit score. Many lenders are willing to help those who at one time had a good credit score and now have bad credit, especially if they can identify a single economic event that caused the good credit rating to turn to a bad credit score.

Many times when a consumers credit turns from good to bad they end up loosing their vehicle, either through bankruptcy proceedings or repossession; after that happens most consumers end up getting a bad credit auto loan through a sub prime auto lender.

Improve your credit rating score

Getting a car loan after a bad credit experience provides a great opportunity to raise your credit score. When you purchase your car here are some things to consider:

• The first loan after bad credit will be at a higher interest rate than you are used to.
• In the future, you will qualify for a better rate if you make you payments on time.
• Because of negative equity, You may not be able to refinance, or trade in your vehicle until ½ the loan term has expired (for example: 36 months on a 72 month loan).
• If you don’t make your payments on time your credit will be even worse off.

Before you buy a car after bad credit you will have to decide what is most important to you. If re-establishing your credit is important to you I would recommend buying and financing an inexpensive car with a loan term of 36 months or less. If you do this, and make the monthly payments on time, chances are you can trade in the vehicle after 18 months and qualify for a much better rate.

After a bad credit experience many people, however, choose to purchase an expensive vehicle with monthly payments that just barely fits within their budget. Often, these vehicles are financed for a 72 month term. After 18 months, when their credit rating is better, it is nearly impossible to trade in the vehicle and get a newer car with a lower interest rate. So if you choose to purchase and finance a vehicle for 72 months after a bad credit experience, plan on keeping that car, and your higher interest rate for quite some time.

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