3 Reasons Bad Credit Buyers Should Choose a Used Car
You might think bad credit is the end of your borrowing and you’ll have to scrape pennies together to buy anything substantial. But the truth is, there are options out there, especially for bad credit car buyers.
Sure, you’re not going to get access to the lowest interest rates and you’ll have to make compromises, but it’s not going to affect your ability to ultimately secure financing.
When you have bad credit, though, it’s a good idea to limit yourself in order to prevent your credit situation getting any worse. One big way to do this is cut down on unnecessary purchases and downgrade other purchases.
If you’re in the market for a car, that means buying used over new. Below, I’ll list a few of the reasons to buy used, especially when you’re dealing with bad credit.
Save Money Up Front
While there are plenty of affordable new cars available nowadays, you can always count on saving more money by buying a gently-used vehicle. Choosing a model that’s just three years old can save you thousands when compared to a brand new model is most situations.
This means that not only is your overall loan commitment less, but you’ll also end up with smaller monthly payments as well. Stay within your budget and you should have no problem making payments to Cincinnati Buy Here Pay Here car lots.
Avoid Going Underwater
When securing auto loans, especially higher interest loans, there’s always a risk of going underwater. This means you owe more on the car than it’s actually worth.
With bad credit, it’s likely that your only loan options will include higher rates, which is more the reason to choose an affordable vehicle that requires a small down payment and a low monthly payment.
Being underwater in a loan is extremely dangerous financially, as you’ll be responsible for the difference should you need to sell the vehicle. The only way out of this would be to take on a personal loan for the difference or roll it over into another car loan. That could put you in a repeating cycle.
New cars depreciate most in the first three years of ownership. By choosing a vehicle that’s between 3 and 5 years old, you can save thousands in depreciation costs and be on the hook for less each month.
Ultimately, buying used is a great way to save money in order to help you work your way out of a bad credit situation. Not only will paying on the loan slowly prove credit responsibility, but a used car is much easier to fit in a budget.
In the end, this all goes toward the goal of saving money and getting out of debt.