Beyond a Bad Credit Car Loan: The Additional Costs of Driving a Car
By: Mike Hamel
score below 620, you will be in the bad credit category. You can
still get a car loan; youll just be charged a higher interest
rate.
To offset the higher interest on a bad credit car loan, you need to
do all you can to keep your payments as low as possible. Having a
decent down payment or trade-in will help. Experts recommend
putting at least 20% down to keep from getting upside down on your
car loan. You can also extend the term of the loan. This will lower
your monthly payment but you will pay more money in the long
run.
If you are buying a new car, never pay sticker price. The sticker
price or MSRPmanufacturers suggested retail priceis what the dealer
wants you to pay for the car or truck. It is several hundred
dollars higher than the factory invoice price, which is what the
dealer paid. You can look up factory invoice pricing online.
Remember, the less you pay for the vehicle, the less you have to
finance with your bad credit car loan.
Besides your bad credit car loan payments, here are a few other
financial figures you should be aware of:
Depreciation
Depreciation is the difference between the MSRP of a new vehicle
and what its worth at a later date. If you buy a new car for
$25,000 and it depreciates $3,700 the first year, thats almost 15%.
On most cars, the rate settles down to between 7% and 10% annually
after the first three years. According to the U.S. Department of
Transportation, the average life span of a vehicle is about 13
years. Even if you keep your car only half that long, you will
still have it for several years after you have paid off your bad
credit car loan.
Tags and Taxes
The purchase of a vehicle is subject to sales tax, unless you live
in Alaska, Delaware, Montana, New Hampshire or Oregon, since these
states dont collect sales tax. You will also have to shell out for
title, registration, tags and emissions fees. These can add up to
several hundred dollars depending on what you buy and where you
live. You can roll all these up-front costs into your bad credit
car loan.
Insurance
Liability insurance is required in order to register a vehicle.
Collision and comprehensive insurance is required by your lender to
cover their investment. Your insurance rate will depend on the
year, make and model of your vehicle and the deductibles you choose
on your coverage. Other factors that influence your insurance rate
are: where you live, your gender, your age, your marital status,
and your driving record.
Fuel and Maintenance
In 1950, when AAA began doing their annual analysis, the composite
cost of driving a car was 9 cents a mile, and gasoline sold for 27
cents a gallon. The composite cost per-mile in 2006 is 52.2 cents.
Thats almost $8,000, if you drive a medium-sized sedan 15,000
miles. And this figure doesnt reflect the recent hikes in gas
prices. Nor does it include car loan payments.
Pre-approved Car Loan
One last piece of advice; get your car loan before looking for a
car. Being pre-approved for your financing sets a realistic limit
on your search. Knowing how much you can spend will also save you
the embarrassment of finding a car and then discovering you cant
get the financing.
Pre-approved auto financing can be secured quickly and easily
online. One site specializing in bad credit car loans is
www.fastcarfinance.com. They offer a no-obligation, free loan
quote. Seeing how much you could be qualified to borrow is a good
way to start shopping for the car of your dreams.
Mike Hamel is the author of several books and the Senior Writer for AIM Techs, an Internet marketing company that specializes in advanced SEM techniques and in developing sites like www.fastcarfinance.com/">Fast Car Finance.
Article Source: http://www.articledashboard.com
Tags: bad credit car loans
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