According to Experian's latest State of the Automotive Finance Market report, leasing and used vehicle sales continue to break records. This is because new car prices are on the rise and consumers are looking for ways to save money.
For those who want to drive a new vehicle, leasing is cheaper than buying. And, of course, buying a used car is less expensive than opting for a brand new model. So if you have bad credit and need a vehicle, should you lease new or buy used?
Why Buying a Used Car with Bad Credit is a Better Option
Jump online and do a quick search for "car lease deals." Several very enticing offers will pop up. Lease a brand new Chevy Cruze for $95 a month! How about a new Volkswagen Jetta for $192 a month? Some dealerships even offer "0 Down" deals on leases.
Who wouldn't want to take advantage of these offers? They sound too good to be true. And if you have bad credit, they really are too good to be true. In fact, these kinds of offers only apply to consumers with very good credit scores.
So if you have bad credit and want to lease a new car, it will be a lot more expensive. This is if (and it's a big IF) you can even get approved in the first place. Considering how difficult it is to get approved for a lease with credit issues and the high fees attached, it really isn't the best option.
On the other hand, for a buyer with bad credit, there are a lot of benefits that come with financing a recent model used car.
- A pre-owned vehicle is budget-friendly. Choosing to buy used will make your payments more affordable and leave more money to put toward credit repair efforts.
- It's easier to get approved for used car financing. Lenders base approval on loan risk. So by financing a less expensive car, you pose less risk to the lender and improve your chances to be approved.
- You can improve your credit with a bad credit car loan. If you handle your auto loan responsibly and make every payment on time, your credit score will gradually increase.
Also, right now is a good time to be in the market for a recent model pre-owned car.
Why More Buyers are Turning to Used Cars
Buying a used car is a popular choice among buyers of all credit types right now. Melinda Zabritski, senior director of automotive finance for Experian, recently stated:
"One of the biggest trends we continue to see is the shift to used vehicles by customers with excellent credit. As vehicle prices continue to rise, savvy consumers are looking for ways to control costs. That appears to be pushing more customers toward used vehicles."
So, yes, a lot of consumers are opting to purchase pre-owned vehicles these days. But you shouldn't worry about any sort of used car shortage. Actually, there is a convenient connection between lease popularity and used vehicle demand.
Experian Automotive has predicted that over 1.8 million vehicles are coming off-lease and will be hitting the market before the end of the year. This means that, right now, dealerships are flooded with recent model used cars. Many of these vehicles will be offered as certified pre-owned (CPO) vehicles.
CPO cars, while a little more expensive than regular used vehicles, offer a lot of extra perks. If they are manufacturer-certified, they have been inspected by a factory-trained technician. They have also been reconditioned and come with limited warranties. CPO vehicles are great options for buyers who want many of the benefits that come with new cars without having to pay the new car price.
Financing for Used Cars with Bad Credit
Buying a used car with bad credit is easier if you can find a dealership that is connected to the right kinds of lenders. Luckily, Auto Credit Express can quickly and easily match you with one of these dealers right in your area. With our free service, you'll get your best possible chance at auto loan approval.
Also, because applying with us requires no obligation to buy, you have nothing to lose. Go ahead and fill out our simple and secure online application to get started today.