Consumer Car Buying Advice Blog

Many bad credit car loan customers assume that a subprime car loan can only finance an older, high mileage used car at a buy here pay here car lot. In fact, the opposite is true…

2 reasons to apply for your next loan at Auto Credit Express

Here at Auto Credit Express, we know that for many customers with credit problems, the only choice 20 years ago was a “tote the note” or “buy here pay here” car dealer. Beginning in the mid-1990′s, a number of private, regional and national banks began to loan money, through new car dealer, to customers with FICO scores below 640. Although these banks have large collection departments, unlike the “buy here pay here lots”, they were much more interested in the loans being paid in full, rather than repossessing the car after a few payments. Since these banks want their customers to keep paying on their loans and an old, high-mileage car that has a good chance of breaking down is not the ideal vehicle for their customers to buy, the ideal car for these loans is a lower mileage used car or, in many cases, a new vehicle. Their reasoning is that the newer the car, the more motivation a customer will have to make payments on time.

The advantages of a new car

Besides having that “new car” smell, new cars come with a number of built-in advantages:

• A full warranty – Most new cars come with at least a 36 month 36,000 mile “bumper to bumper” warranty. This means that all systems on the vehicle are covered – engine, drive train and electrical/electronics. Warranty repairs lower your cost of ownership, since they require no out of pocket expenditures.
• Manufacturer backed extended warranties are available to cover the balance of the loan contract at a much lower price than a comparable used car service contract. Many of these warranties also include additional perks such as roadside assistance for flat tires and gas as well as mechanical repairs.
• In addition to warranties, most states have new car lemon laws that cover defects that the dealer cannot fix. These laws don’t cover used cars.
• Most subprime lenders offer lower interest rates and longer terms for new cars.

Keep your expectations reasonable

Even though you may be able to buy a new car with a bad credit loan, the same rules apply to new cars that apply to used cars:

• The objective of a bad credit car loan is to reestablish your credit, not to buy your dream car.
• Do some research. If you are interested in a compact sedan, consult some automotive web sites such as consumerreports.org and Edmunds.com for quality and reliability data.
• When you are doing your research, pay close attention to fuel economy and insurance rates to keep the total cost of ownership as low as possible. If two cars are similar in size, price and reliability, choose the one with the lower insurance rates.
• Check for rebates and dealer cash back. Many new cars come with customer rebates that can be researched and viewed on different web sites.

Cars that are reliable, but won’t break the bank

Kia Rio – The Rio, recently rated the highest-ranked subcompact car in initial quality by J.D. Power, has a 5 year/60,000 mile basic warranty that includes roadside assistance as well as a 10 year/100,000 mile basic powertrain warranty. Prices on the Rio start at $11,515. The Rio was recently ranked the 7th most affordable car to own.

Chevrolet Aveo – The Aveo has a 3 year/36,000 mile basic warranty that includes roadside assistance as well as a 5 year/100,000 mile basic powertrain warranty. Prices on the Aveo start at $10,895.

Honda Fit – The Fit, a Consumer Reports recommended vehicle and a Car and Driver “10 Best” two years in a row, has a 3 year/36,000 mile basic warranty as well as a 5 year/60,000 mile basic powertrain warranty. Prices start at $13,950. Consumer Reports recently ranked the Honda Fit the least expensive vehicle to drive in the U.S. – based on price, reliability and fuel efficiency.

Apply online at Auto Credit Express

A new car can be a good choice for a bad credit car loan. Keeping the monthly payment within your budget and knowing the total cost of ownership is also important. Our web site, www.autocreditexpress.com, can help you set a budget as well as estimate your payments. Give us a chance to earn your business. Remember, we want you “on the road” to better credit!

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