This is an terrible situation to find yourself in: You take out a loan to purchase a car, only to figure out a couple of months later that you really can’t afford to make the payments. What can you do? You have a few options open, but the most important thing is that you take some kind of action because involuntary repossession is going to be the least desirable outcome.
If you aren’t able to put up a down payment that covers that initial hit in value, you could find yourself in a frustrating situation if you need to sell or trade in the car after a couple years and still owe money on the car loan. So, what causes this drastic drop in value? This reduction in value is known as depreciation, and pretty much everything you buy suffers from it. In the case of automobiles, new models are rolled out, and advances in driving technology are made.
One of the keys a successful subprime auto loan is financing a vehicle that’s dependable. In that regard, the latest findings from J.D. Power and Associates should help credit-challenged borrowers select the right vehicle.
So what’s the moral of the story? It’s simple. You can save a lot more money by simply choosing the right car than by working a great deal on the wrong car. This is doubly true if you have bad credit and you’re working with a tight budget.
Your credit is damaged, but you’re still interested in buying a brand new car. Is this even possible? It may be, but your success will depend on a few factors. If your credit is on the good side of bad, and you’re willing to be realistic about your new car purchase, then you can expect to be able to get financed for a never-before-owned vehicle.
Credit-challenged borrowers who choose one of these affordable cars and pick the shortest loan term possible will find that, once they’ve reestablished their credit, they’ll be in a much better position for their next loan.