Good News About Bad Credit Car Loans
By: Mike Hamel
Almost half of all car purchases in America are financed. Couple
this with that fact that 30 million Americans have credit problems
and you see why theres such an interest in bad credit car
loans.
While carrying higher interest rates than prime loans, bad credit
car loans are not hard to get. Even people who have filed for
bankruptcy can find a decent deal on auto financing if they shop
around. It doesnt matter if they buy new or used.
Bad Credit Car Loans - Buying New
For peace of mind, safety and hassle-free driving, theres nothing
like buying a new car. When you buy new, you have more control over
optional features than if you buy a pre-owned vehicle. You will
also get a new warranty that lasts much longer than the extended
warranty you can buy for used cars.
The danger in buying new is getting upside down on the bad credit
car loan. One way to avoid this is to have a decent down payment20%
or better. Another way is to choose a vehicle with high resale
value. This will help slow down depreciation.
Depreciation is the difference between the Manufacturers Suggested
Retail Price (MSRP) when you bought the vehicle and what its now
worth. A $25,000 car will depreciate an average of 15% the first
year and between 7% and 10% annually for the next two years. Cars
with a prestigious nameplate hold their value longer and are less
likely to depreciate faster than the car loan.
Bad Credit Car Loans - Buying Used
Buying a used vehicle makes sense if you want to keep your monthly
payments affordable. Since used cars depreciate slower than new
cars, they make better short-term collateral for lenders. However,
some lenders will decrease the loans term and increase the rate on
bad credit car loans.
When you buy used, you have the chance to get a more expensive
model than you could afford if you bought it new. For about the
same amount, you could own a new Hyundai, a two-year-old Taurus, or
a six-year-old BMW.
Getting a used vehicle from a private party will be cheaper than
buying the same car from a dealership. Here are a few questions
youll want to ask the seller:
- How long have you owned the vehicle?
- Has the vehicle been in an accident or repainted?
- When are the next state inspection and emissions tests due?
- How often has the oil and filter been changed?
- Why are you selling the vehicle?
First Things First
With the ease of the online application process at sites like
www.buyaauto.com, you can pre-qualify for a bad credit car loan
before you start shopping for a vehicle. Make sure to borrow enough
money to cover all the costs associated with the purchase such as
dealer prep charges, if you are buying new, license plates, title
and registration fees, etc.
Remember that total price is more important than the monthly
payment. Stretching the length of a bad credit car loan will mean
paying more interest. For instance, the payments on a $20,000 loan
can be lowered from $500 a month to $360 by extending the term from
48 months to 72 months. However, this will cost about $2,000 more
over the life of the loan, or 10 percent of the loan amount.
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 Buy A Auto.
Article Source: http://www.articledashboard.com
Tags: bad credit car loans
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