Consumer Car Buying Advice Blog

Consumers with bad credit got some much needed help today when Kelley Blue Book announced that it officially launched a new certified used car section on its web site

Become educated

At autocreditexpress.com we believe in working with people who have bad credit and helping these consumers raise their credit scores while reestablishing their car credit – a form of credit repair – by filling out our online bad credit car loan application and financing a vehicle through our nationwide network of dealers that specialize in car loans with bad credit.

Along the way we try to provide their applicants with the information needed in order to make educated decisions about the kind of loan they should choose (such as a tote the note loan versus a bad credit car loan). The reasoning for this is that a bad decision at this point could result in a loan the applicant can’t afford which could turn into in a repossession that could lower their FICO scores even further.

Begin with a reliable car

With the cost of new vehicles rising every year, most credit-challenged individuals that apply for auto loans for bad credit and get approved will decide that it is much more affordable to raise their credit scores and reestablish their auto credit with a 2 or 3-year-old pre-owned vehicle.  With the quality and durability of vehicles at an all-time high, this decision makes sense.

Now those same consumers are faced with another decision: should they use this second chance auto loan to buy a regular used car or a certified used car?

CPO vehicles

If you’ve read any of the previous blog articles here at Auto Credit Express, you know how we feel about certified used cars – generally known in the industry as certified pre-owned or “CPO” vehicles. The fact is, we believe that these certified used cars can be a good choice for many credit challenged individuals.

Most CPO programs work this way: if a vehicle meets certain age and mileage requirements and can pass a required inspection, dealers can use these trade-in or lease turn-in vehicles and sell them with an extended service contract that is very similar to the warranties found on new vehicles – the only difference being that the number of miles and years can be extended past the original warranty termination date to cover additional months and miles the amount of which depends upon the manufacturer and the program involved.

Because of this built-in, manufacturer-backed warranty coverage and other perks (such as roadside assistance), the dealer can (and usually has to because of the additional cost involved) sell these CPO vehicles at a premium over non-certified used cars, which is also something that bad credit buyers should keep in mind when considering the affordability factor of these vehicles.

Kelley Blue Book

The key to CPO vehicles for a bad credit car loan, then, is the affordability factor. Before today, it was very difficult to determine how the price a dealer charged for a manufacturer-backed certified used car compared with the market average, since the used car values listed in either NADA or Kelley Blue Book were based on non-certified cars.

Beginning today, however, visitors to kbb.com will be able to input the year, make, and model of a vehicle to come up with the CPO value of a used car. According to Kelley, CPO values are calculated in the same way that the value of a conventional used car is determined, while also factoring in the “value that is associated with the certified used program.

This is not nearly as simple as it looks, since the CPO programs for each manufacturer vary greatly. This also means that the differences between a regular used vehicle and a CPO vehicle can also vary by manufacturer, since some manufacturers offer longer warranties and more additional services (such as rental cars) than others. So while comparing a CPO Chevrolet to another CPO Chevrolet is easy, comparing a CPO Chevy to a CPO Ford can be more difficult because of the differences between the two manufacturer’s certified used car programs. To help solve this issue, Kelley has also designed a page in which you can list four different manufacturers programs, side-by-side, to directly compare their various  features and benefits.

Be sure it’s backed by the manufacturer

“Many car shoppers have heard the term ‘certified’ but they aren’t sure exactly what that means, let alone if it is right for them or what they should be paying for a CPO vehicle,” said James Bell, executive market analyst for Kelley Blue Book. “The new CPO section on kbb.com and Kelley Blue Book’s CPO Value take the mystery out of CPO and provide shoppers with all of the tools and advice they need to research and purchase a CPO car.”

Keep in mind that the programs we’re talking about here for bad credit car loan customers are part of the manufacturer’s certification program. Just because a dealer advertises a car as certified does not necessarily mean that it is part of the a manufacturer-backed program. Any dealer can “certify” a car, since the word, itself, really has no meaning. So if you are considering a “certified” car from your local dealer, be sure it certified under the factory program. If not, you may be required to pay for any repairs up front and submit the receipts to an outside warranty company for reimbursement – a process that can be a hassle.

Choosing the right vehicle

One other thing that we’re concerned about at Auto Credit Express is keeping your bad credit auto loan payment as affordable as possible. While many credit challenged customers want to buy an SUV or something else that’s fairly expensive , buying this kind of vehicle really doesn’t make any sense at this point in time. The high interest rates charged by bad credit lenders will put the payment out of the reach of most budgets, while insurance costs will make owning it even more expensive.

So whether you choose a certified used car or one that isn’t certified, the smart alternative is to choose a small to midsize car and, if your budget can handle it, finance it for the shortest term possible to save on interest expenses. By financing a car for a shorter term, you should be in a position to re-finance or purchase a newer vehicle in two years or less at a lower rate. Carry this contract for another two years and, with other improvements in your credit, you could be ready to finance the car of your choice at a close to normal interest rate.

The bottom line

Certified used cars are usually more expensive than their non-certified counterparts. The costs of an inspection, the required replacement of warn and/or defective parts as well as a fairly expensive service contract all add to the price of any CPO vehicle. Before buying one, it makes sense for credit-challenged customers to do some research and compare the selling prices of both certified pre-owned vehicles and their non-CPO counterparts (priced with a comparable warranty from a reputable warranty company).

Auto Credit Express has helped thousands of people with bad, blemished, bruised, and tarnished credit buy cars and reestablish their auto credit at the same time. Our nationwide network of affiliate dealers specializes in bad credit car loans. So if you are serious about getting your credit back on track, you can begin the process right now by filling out our secure online bad credit car loan application.

Tags: auto loans for bad credit, bad credit, bad credit auto loan, bad credit car loan, car loans with bad credit, certified pre owned, certified used cars, cpo, credit, fico, FICO score, kelley, kelley blue book, nada, repossession, second chance auto loans, tote the note

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