A recent report from Manheim suggests that compact and subcompact used cars may be getting more affordable

Cheap used cars

Consumers with bad credit typically end up financing a recent, low-mileage used car – which isn't a bad thing. That's because the used cars available today are more reliable, much more fuel efficient and last longer than ever before.

Small Used Cars Getting Cheaper

Because most credit-challenged buyers will only qualify for car loans that carry higher-than-average interest rates, we also recommend they choose an affordable used car – which usually means something in the compact or subcompact class. The good news for these buyers is that it looks as if these vehicles are becoming more affordable.

Manheim fourth quarter used car report

Manheim specializes in vehicle remarketing services and is the world's largest used-vehicle marketplace. According to their fourth quarter 2014 report, entitled "Manheim Reports Strong Year-End Close For Used Car Market", used vehicle wholesale prices, on average, were up 1.8 percent from a year ago and 2.1 percent higher than the third quarter of 2014.

The good news is that, on average, wholesale prices for compact cars dropped 1.1 percent in December. Manheim explains that the reason for this price drop was consumers moving "to CUVs and mid-sized cars."

Whether or not the drop in prices for smaller cars will continue is anybody's guess, but the fact that fuel prices remain low means there's a good chance it will continue at least until gasoline prices begin to rise.

The Bottom Line

Choosing to finance an affordable subcompact or compact car just makes sense for borrowers who are credit-challenged. The good news is that these vehicles, because of moderating fuel prices, are becoming more affordable.