Borrowers with damaged credit often find that qualifying for a car loan is not as difficult as staying within their budgets
Car shoppers that have experienced problem credit in some cases don't take their overall financial situation into account before choosing a vehicle for a high risk auto loan.
However here at Auto Credit Express we do understand how important this is because for the past two decades we've been helping consumers with bad credit that have been checking out online car loans find the kind of dealers that represent the highest probability for car loan approvals.
But unlike the older types of vehicles that represent the inventories of most BHPH car lots, the vehicles these dealers carry and those that subprime auto lenders generally finance are newer. Among other things, they require higher levels of insurance coverage. This means that these credit-challenged car buyers will need to make a number of decisions that could directly affect the overall success of their credit repair efforts.
Here, then, are a number of car buying tips t we've learned based on over twenty years of experience:
Car insurance costs
The biggest expense that borrowers usually fail to budget enough money for is auto insurance.
For the most part this is due to the fact that, for many, the vehicle they're currently driving is paid off – meaning that their present policy coverage only includes personal liability and property damage.
When financing a vehicle, lenders will always require that borrowers have full coverage auto insurance. This means adding additional coverage, along with the associated costs, for both collision and comprehensive damage coverage.
Even buyers that currently have full coverage car insurance sometimes find out that their policy cost has increased because newer cars with their added safety and convenience features are typically more expensive to repair and to replace.
When deciding on a new car, buyers shouldn't ignore the advantages of better fuel economy. An SUV may be their dream vehicle, but taking on a high-risk car loan is not the time to chase that vision. Not only will finance costs be high, but also most large vehicles are saddled with relatively poor fuel economy.
Choosing a subcompact, compact or even an affordable midsize sedan means lower monthly loan payments as well as saving money on the cost of fuel - helping lower overall monthly expenses even further.
Borrowers financing a new vehicle should be sure to check the length and coverage of the new car warranty. If major systems aren't covered for the entire loan term or if some are only covered for a portion of the loan one option is purchasing a service contract (sometimes mistakenly referred to as an "extended warranty") to cover the remainder of the loan.
If the vehicle being financed is a used car, a service contract is something that should definitely be considered – unless the borrower plans on setting aside funds each month for unexpected repairs.
Tire replacement costs
Another thing buyers tend to overlook is the cost to replace the original equipment tires. While the tires on the majority of subcompact and compact cars are relatively affordable, some compacts and a number of midsize vehicles may have higher-performance tires on them that wear out sooner and can be expensive to replace.
Given the choice between two comparable vehicles, it's always a good idea to verify both the condition of their tires as well as how much it would cost to replace them. Picking the car whose tires have a longer tread life and are more affordable to replace could save hundreds of dollars in ownership costs.
The Bottom Line
For borrowers with poor credit it's not just the car payment but also the insurance, fuel, maintenance and tire costs that need to be considered when setting up a monthly vehicle budget. Buyers who fail to do this risk exceeding their budget – not only a concern but also a reason some of these loans end in repossession.
Another thing for credit-challenged buyers to consider: Auto Credit Express matches consumers that have experienced car credit issues with dealers that can offer them their best opportunities for approved car loans.
So if you're ready to establish your auto credit, you can begin now by filling out our online car loan application.