A repossession is one of the worst things that can appear on your credit report if you are hoping to finance another vehicle. Here's why it can happen and what you can do about it.

Borrowers, especially those with past credit issues on tight budgets, should never confuse price with cost. Price is what you pay for a vehicle while cost includes the overall expenses including gas, insurance, maintenance and depreciation.

When given the choice of financing a new car, we suggest that buyers with credit issues choose an affordable compact or subcompact – vehicles that are also fuel efficient and inexpensive to insure. Opting for the shortest loan term possible, once they've reestablished their credit these consumers will be in a much better position for their next loan.

By following these tips from H.E.A.T., car owners should have a much better chance of keeping the holidays bright.

Consumers with checkered credit are far more likely to get stuck financing a vehicle with hidden damage than other buyers. By following all the above steps they can prevent this from happening.

The trend toward longer loans and higher payments is not a good one – especially for borrowers with problem credit – as this increases interest charges as well as the length of time a borrower is upside down in the loan. Borrowers with credit issues, in particular, should keep the loan term and amount financed as low as possible so they can trade out earlier and into another vehicle with a more manageable interest rate.

Although the subprime sector remains strong, consumers with larger down payments and lower loan to value ratios will continue to have a better chance of getting an auto loan approval.

In the annual Financial Literacy survey conducted for NerdWallet and the National Foundation for Credit Counseling, we note that it's not just credit-challenged Americans that come up short in understanding their finances.

If you have bad credit or even if your budget is on the thrifty side, here’s how the least expensive new cars in July 2017 stack up.

Although the average price of a new car is a bit more affordable, borrowers should choose a reasonable vehicle if they're financing one with a subprime loan. Doing that as well as maximizing the down payment while keeping both the loan term and payment-to-income ratio to a minimum will go a long way towards ensuring the successful completion of a high-risk car loan.