Good News About Bad Credit Car Loans

Good News About Bad Credit Car Loans

Summary: If you have bad credit and are thinking about buying a car, here are a few of the differences between choosing a new or used vehicle.

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Article Body: Almost half of all car purchases in America are financed. Couple this with that fact that 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 payment% 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 $, car will depreciate an average of % the first year and between % and % 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 $, loan can be lowered from $ a month to $ by extending the term from months to months. However, this will cost about $, more over the life of the loan, or percent of the loan amount.