Bad Credit Car Loan Ownership Costs
by Steve Cypher on Tuesday, February 23rd, 2010Credit challenged consumers need to consider a number of costs in addition to their monthly payment when budgeting for a bad credit car loan.
What we do
At Auto Credit Express we’ve spent close to 20 years focusing on consumers with bad credit and helping these same applicants raise their FICO scores and reestablish their car credit by financing a vehicle with a bad credit auto loan. Along the way, we try to provide our applicants with the information needed in order to make an educated decision on whether or not to apply for a bad credit loan, since a poor decision can trap them in a loan they can’t afford which might actually lower their credit scores even further.
As with anything else, the key to a successful bad credit car loan is focusing on the basics. In this case, it means understanding that there are more costs involved with a bad credit car loan than just the monthly payment.
Car insurance expenses
A major expense that many bad credit customers fail to include in their car budgets is the cost of car insurance. Even if you have insurance on your present vehicle, if your current car is paid off the insurance that you are required to carry may be low cost partial coverage insurance. When you finance a car the lender will require that you carry full coverage insurance on that vehicle. In addition, the car that you’re replacing probably is, in most cases, an older model and it’s important to realize that it costs more to insure a newer car.
Fuel expenses
That sport utility vehicle may be your dream car, but in addition to being more expensive, it also has poorer gas mileage. If you buy a midsize or compact car, you will save on gas as well as your monthly payment. A good resource to use to compare yearly fuel costs is the “Fuel Economy Guide” published annually by the EPA. You can order a copy or download a PDF version of the guide by visiting their web site www.fueleconomy.gov.
Maintenance expenses
If you’re buying a new car, review the manufacturer’s warranty before signing the finance contract. Make sure you are covered for the entire length of your finance contract. If this isn’t the case, you might want to consider an extended service contract and roll its cost into your monthly payment. If you’re buying a used car, an extended service contract is almost a “must have” addition. You’ll need to budget for the increase in your payment, but if some major component on your car breaks, you’ll be glad you bought it.
As we see it
When buying a car with a bad credit car loan, be sure that you include all these items in your car budget. To help you determine what you can afford, please refer to the car loan calculators on our web site.
For more information, please visit www.autocreditexpress.com to see what we can do for you.
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