Buyers with bad credit can sometimes choose to finance new cars once they have received approved auto loans
Even if you have bad credit it is sometimes possible to finance a new car with terrible credit auto loans.
We should know because we've been a part of bad credit auto sales for close to twenty years here at Auto Credit Express - where we created a web site for our applicants to learn about issues such as buy and pay here dealers and repossession as well as today's topic, financing new cars with poor credit car loans.
Bad credit auto loans
Unlike typical tote the note dealers, most of the dealerships that offer bad credit car loans are franchised new car dealers. At the same time, the number of banks offering loans to credit-challenged customers has, in the past two decades, grown from just a handful to dozens of national, regional and local lenders.
Since many of the programs they offer include the possibility of financing a new car and the dealers that offer them sell new cars, this means that in some instances, bad credit customers might qualify for something other than a used car.
And while the lending requirements for these bad credit auto loans are much stricter than a typical car loan, there are still quite a few new car models that often qualify for these programs.
There are a number of advantages to buying a new car:
1. They come with a new car warranty
2. New car warranties often include free roadside assistance
3. There is usually an option to purchase an extended warranty to cover the entire loan term.
4. You usually have a choice of colors and options.
The biggest drawback to purchasing a new car is depreciation. A new car will typically lose at least 15% of its value as soon as it's driven off the lot. This means that most of what you shell out in payments during the first couple of years will be lost to depreciation. It also means you'll usually be “upside down” in the loan for the first 2 ½ years of a 5 year loan. But there is even a way to get around this obstacle.
The solution is to either make a down payment of at least 20% or reduce the length of the loan from 60 months to 48 or even 36 months.
As we see it
New cars are more reliable and come with warranties and other nice perks. You can also offset the issue of negative equity with a large down payment or a shorter loan term.
Also remember that at Auto Credit Express we can help you find a dealer for your best chance at approved auto loans.
So why not take the first step in the process of establishing your car credit is to fill out our online auto loans application.