According to a new report by Experian, a huge number of US consumers are buying cars. The phenomenon is a result of easier loan access and less-stringent approval criteria. The report revealed that lenders and banks financed 85 percent of the total new car purchases and 53.8 percent of used cars in the second quarter. This is higher by 0.5 percent and 0.9 percent, respectively, from the last year.
Everyone is running to the dealership lot for buying a car but you should not do the same thing if you have bad credit score. For ensuring success at the time of buying a car, a bad credit car buyer has to consider several things like your budget, credit score, down payment, etc. But, there is one more important thing that requires your attention and it is the car you are buying.
New Car or Used Car – That is the Question
Whether your car loan will be affordable or not depends on the car that you buy. So, you have to be extra careful because it has the power to improve or ruin your credit score.
Most bad credit buyers receive higher interest rates in comparison to others. So, if you buy a new automobile, you will end up paying more in terms of interest. Also, it will be costly for you because insurance premium amount is higher for new car in comparison to old cars.
It is safe to buy a used car with bad credit history because its low-cost will ensure an affordable loan amount. If you are careful in choosing a used car, you will have the advantage of obtaining a reliable automobile with less maintenance cost.
Options for buying a Used Car
Once you decided to opt for older cars, you have two sources to choose from:
1. Dealership Lot
If you are worried about ending up with a lemon, you can obtain a CPO (Certified Pre-Owned) car. CPO cars are ideal for car buyers who want to buy a less-costly used car that has undergone safety and performance inspection. It usually carries extended warranty.
Although, you must keep in mind that certified cars are a bit expensive than other alternatives because dealers conduct a thorough inspection of the automobiles.
2. Private Party
You can buy a car from a friend, colleague, neighbor or online seller. All such sales are categorized as private party car sales. Such deals are ideal for those buyers who want to avoid the incessant pressure of the salesman. A private party car purchase also leaves more room for negotiation but you have to ensure the reliability of the car as there is no certification available.
Next comes the Bad Credit Auto Loan for buying a Used Car
After you have made a decision about buying a used car, it is time to apply for a bad credit car loan. Before you go to a bank or seek dealership financing, you must consider the online auto financing companies. These institutions work with a lender network and ensure that your credit application reaches several sub-prime lenders and thus, ensure higher approval chances.
Here are few tips for obtaining quick approval on your online loan request:
>> Apply only with a sub-prime lending company with a secure website
>> Make down payment or trade-in your old car for lowering the loan amount
>> Bring a co-signer as it will increase lender’s faith in your loan application
So, this is how you can become successful in buying a car with bad credit history. Remember this bad credit car loan guide before heading out to make the purchase.