Buying New Cars with Bad Creditby Steve Cypher on Tuesday, July 31st, 2012
Subprime auto lenders sometimes offer buyers the chance to finance something other than a low mileage used car.
We know it’s possible because here at Auto Credit Express we’ve spent the last twenty years helping car buyers with less than perfect credit find a dealer that can arrange for approved auto loans.
The car dealers we work with
Unlike the various buy here pay here and tote the note dealers that advertise your job is your credit, the franchised new car dealers that we work with offer loans that can help you establish your auto credit.
The other good news is that in this improving economy the number of banks offering these loans has increased to dozens of national, regional and local lenders. Since many of these loan programs include new car financing, this means that in some instances, auto loan applicants may qualify for a new car.
And while the lending requirements from bad credit lenders are stricter than a conventional car loan, there are still a number of new cars that often qualify for these programs.
Buying a new car comes with a number of advantages:
• New cars typically come with a comprehensive new car warranty
• New cars often come with free roadside assistance programs
• There is usually the option of purchasing an extended warranty to cover the entire loan term.
• Buyers typically have a choice of both colors as well as options.
The biggest drawback to buying a new car is depreciation. Most new cars drop 15% or more in value as soon as they’re driven off the lot. This means that any payments made during the first half of the loan are lost to depreciation and you’ll usually be “upside down” for at least the first two and a half years of a five year loan.
But at the same time you can also reduce this issue with either a large down payment (20% or more) or by reducing the length of the loan term from 60 months to 48 or even 36 months.
As we see it
Choosing a new car has obvious advantages. They are more reliable and also come with warranties and other nice perks. To offset the negative equity problem, you can either shorten the loan term or boost the down payment amount.
Also remember that Auto Credit Express helps people who have experienced credit problems find a dealer for their best chance at approved auto loans.
So if you’re ready to reestablish your car credit, you can begin the process by filling out our online auto loans application.