Consumer Car Buying Advice Blog

Market research firm IntelliChoice shows bad credit car loan consumers the way to go when choosing a used car.

Making an intelligent choice

At Auto Credit Express we realize that a majority of our bad credit car loan buyers will choose a used car. Unlike twenty years ago, this is not a bad thing. Over that time, used cars have become much more reliable. Advances in quality control and reliability mean that even the average car can be expected to last at least 100,000 miles, with many vehicles capable of lasting much longer.

Unlike “tote the note” and “buy here pay here” dealers, modern special finance lenders, who do their financing through franchised new car dealers, usually require either new or newer, low-mileage used cars that these types of dealers are comfortable selling.

The reason for this is quite simple: if a customer, even a bad credit customer, is driving a newer and more reliable vehicle, that customer is more likely to make their payments on time.

And when you combine this with the fact that the average new car loses between 15% and 30% of its value as soon as you drive it off the lot, we can see why so many bad credit car loan shoppers decide that it is more cost effective to go with a 2 or 3 year old pre-owned car rather than a new one.

Now these same consumers are faced with another decision: should they buy a regular used car or a certified pre-owned car?

What is certified pre-owned?

Real certified pre-owned cars are vehicles that are either traded-in or returned off-lease (once the new car lease is finished) to the franchised dealer. Based on certain base factors (year, mileage and general condition) that qualify them for the manufacturers CPO program, these vehicles then go through an inspection and certification process (that involves replacing worn and broken parts) in order to qualify for the manufacturers CPO program.

Because of the requirements involved for certification, these certified used cars are more expensive than their non-certified counterparts. The costs involved with an inspection, the required replacement of certain warn and defective parts as well as a fairly expensive service contract all add to the price of a CPO car. But, in all fairness, it can be difficult to put a price on the peace of mind buying one these vehicles can bring to many bad credit auto loan customers, which brings us to the results of the latest survey conducted by IntelliChoice.com.

Manufacturer CPO programs

IntelliChoice.com has just announced the winners of its 11th annual ranking of CPO manufacturer-sponsored programs. And while IntelliChoice ranks both luxury and non-luxury vehicles, at Auto Credit Express we are listing only the non-luxury brands, since these are the most appropriate cars for a bad credit car loan.

The overall winner and best categories are pretty self-explanatory, while the 100% inspection score is based upon the manufacturers required vehicle inspections versus a baseline inspection scorecard developed by IntelliChoice as well as the following criteria:

• Extended manufacturer warranties
• Title verification
• Certification inspection process
• Roadside assistance – special financing
• Return exchange policies
• Program/dealer compliance
• Brand value

And the 2010 winners are:

Non-Luxury Brand

Overall Winner: MINI and Volkswagen (Tie)
Best Warranty: MINI
100% Inspection Score: Ford, Mercury, Nissan, and Suzuki
Strongest Brand Quality: General Motors and Honda (Tie)

Ranking:
Manufacturer Ranking
1. MINI (Tie)
1. Volkswagen (Tie)
3. Hyundai
4. Honda
5. Kia

“Volvo, Mini, and Volkswagen continue to dominate the rankings with a focus on consistency and quality in their programs,” said Eric Andersen, senior analyst, Intellichoice.com. “We are very impressed with the improvement Kia has made with a relatively new program. Kia now joins Hyundai in the top five non-luxury programs and demonstrates a strong and aggressive push from the Korean manufacturers to strengthen their brands in the U.S.”

The Bottom Line

There are a lot of choices in the marketplace if you’re a bad credit car loan shopper looking for a pre-owned car. Although you will have to decide for yourself if a CPO car is worth the difference in price, knowing how the various programs stack up against each other can be an important factor in the decision-making process.

For more information on bad credit car loans and the bad credit auto loan buying process, visit our web site at www.autocreditexpress.com.

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