A recent Experian Automotive study shows that customers with poor credit need to be especially careful when choosing a bad credit car
You should know
Having bad credit you should be especially concerned about the kind of used car you'll be financing with poor credit car loans.
We have seen this issue many times before in the two decades we've been involved with bad credit auto sales here at Auto Credit Express.
Our education process begins by showing customers that a tote the note dealer can't improve their credit scores (outside our retail areas applicants can fill out an online auto loans application to find a nearby dealer) and continues as we give them tips on how to reduce the chances of repossession.
We also usually advise buyers that a used car is the best choice for terrible credit auto loans since a new car, according to Consumer Reports can lose up to “47 percent of its value in the first three years” making buying used both a smart and an affordable decision.
But buying used also carries with it the risk that the car you are buying isn't what the seller says it is.
In many cases, the “clean” title that the seller shows you is only clean because the vehicle's previous “branded” title was washed. In other cases, you may be signing a branded title not realizing what it really is.
A recent Experian Automotive credit trends study compared vehicle history to loan performance. Here is what it found:
"…vehicle history can have a major impact on loan performance. The study found that more than 2 percent of the late-model used vehicles (model year 2005 and newer) had a negative vehicle history event (frame damage, salvage, odometer rollback, etc.), which can significantly impact the vehicle's value."
In addition, "The study also showed that while these instances occur across all credit segments, more than 3 percent of financing outside of prime had negative vehicle history."
Which makes this statement even more important for buyers financing with terrible credit auto loans: "Vehicles with a negative history event also referred to as 'brand', also have a higher percentage of charge-offs for lending institutions."
Vehicle history reports and inspections
As a buyer, there are at least two things you can do to avoid buying a vehicle with a negative history.
1. Order a vehicle history report from either Carfax or AutoCheck.
2. If the vehicle history report is clean, have it inspected by an ASE Certified Master Mechanic.
As we see it
To successfully complete a bad credit auto loan, you need to finance a car that won't cost you hundreds or even thousands of dollars to keep running. Even if the vehicle is reliable, it could end up costing you money at trade in time (and put off your ability to trade it in sooner) if it has a branded title.
At Auto Credit Express, we specialize in placing customers with bad credit with dealers that can help them. These dealers are experienced and work with lenders who offer horrible credit auto loans for your best chance at an approval.
So if you're serious about getting your car credit back on track, you can begin by filling out our online auto loans application now.