A recent report from the used car auction company ADESA shows that although the overall market was up in April, prices for midsize, compact and subcompact vehicles dropped.
Used Cars and Bad Credit
One of the keys to successfully completing a subprime car loan has to do with choosing the right type of car to finance. In many cases, the obvious choice is an affordable used car.
But the used car market is a fickle place. While some models (often depending on the make) slowly lose value, others drop precipitously. Historically, the price of gas can also affect used car values.
A report released this past May from vehicle auction operator ADESA shows used car prices were up in April. But the rise in prices was also affected by newer off-lease vehicles going to auction while moderate gas prices meant not all segments saw an increase in prices.
ADESA 2015 April Report
According to executive vice president of ADESA Analytical Services Tom Kontos, "Average wholesale used-vehicle prices were up on both a month-over-month and year-over-year basis again in April, but again, this was mostly due to a significant proportion of sales of higher priced, late-model, off-rental, manufacturer program vehicles, which elevated average prices."
ADESA reported that the average price of vehicles that went through auction lanes in April was up 2.2 percent year-over-year. But the company also noted that "Midsize and compact car prices were on the way down in April, falling by 3.8 percent and 1.4 percent, respectively, from March levels."
The last bit is good news for many used car buyers, but especially those with damaged credit since those two vehicle types, plus the compact segment (which, we assume, also saw a fall in prices) represent the most affordable kinds of used cars.
This means that if your credit is less than perfect, now is probably a good time to finance one of these types of used cars.
The Bottom Line
Although pricing in the used car market remains strong, the affordable vehicles that are most appropriate for borrowers with bad credit are, at least at this point, more affordable than they were last year. This being the case, now might be a good time for buyers with tarnished credit to pull the trigger on buying a subcompact, compact or affordable midsize used car.
Something else for these buyers to consider: Auto Credit Express specializes in helping borrowers with less than perfect credit find those dealers that can give them their best opportunities for a car loan approval.
So, if you're ready to reestablish your credit, you can begin now by filling out our online car loan application.