Sometimes consumers with problem credit have the opportunity to finance a new car with a higher risk car loan
Lenders that offer auto loans through franchised new car dealers to car buyers with bad credit sometimes offer the option of financing a new car.
At Auto Credit Express we know this is true because for the past two decades we've been helping car buyers with poor credit looking for online auto loans find those dealers that can offer them their best chances for auto loan approvals.
How these dealers are different
Unlike BHPH dealers that advertise everything from "we finance everyone" to "your job is your credit," the franchised car dealers we work with offer auto loans from lenders that report both these loans and the payments made on them to the major credit bureaus – thus helping borrowers establish their car credit.
The rest of the good news is that in the current improving economy the number of sources offering these types of higher-risk loans has increased to dozens of national, regional and local lenders. Since some of these loan programs include the choice of new or used car financing, this means some of these buyers may qualify for a new car.
And while the lending guidelines of subprime lenders are more restrictive than those of a conventional car loan, there are still a number of new cars that often meet their requirements.
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
• New cars usually come with the option of purchasing an extended warranty to cover the entire loan term.
• New car buyers, even those with bruised credit, are typically given a choice of colors and, in some cases, options.
New car issues
On the other hand, buying a new vehicle also comes with disadvantages. The biggest drawback is depreciation. Most new vehicles drop in value by 15% or more 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 - with buyers typically finding themselves "upside down" for at least the first half to two thirds of any new car loan.
Another drawback: new auto insurance costs can be more expensive.
However, it should be pointed out that the window of "negative equity" can be shortened 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 for insurance costs, the safety systems found on many new cars can also result in policy discounts from the insurer.
As we see it
Financing a new car comes with some obvious advantages. New vehicles are more reliable and also come with warranties and other nice perks. To offset the biggest issue - negative equity - buyers can either shorten the loan term or increase the amount of the down payment.
Another good thing to remember: Auto Credit Express matches people that have experienced difficulties with their car credit to those new car dealers that can offer them their best chances for approved auto loans.
So if you're ready to reestablish your credit, you can begin now by filling out our online auto loan application.