Finance a used car? 6 tips if you have bad credit
If you’re not careful about buying your next used car, it could cost more than what you bargained for. Here are six tips to help you save money and get the vehicle you need when financing a used car with bad credit.
Why Consider a Used Car When You Have Bad Credit?
Bad credit can make it difficult to finance a vehicle, so borrowers with bad credit often opt for a used borrower for the initial savings of buying a cheaper car. Cheaper vehicles can mean overall savings – from the need for less down payment to less interest charges.
A used car can be a great option for many reasons, but there are some things you should keep in mind. If you only buy for the bargain, you may end up paying more for maintenance and repairs in the long run, which will save your initial savings for nothing.
Let’s take a look at six tips for getting the most out of it when buying a used car.
1: Get a vehicle history report
When you finance a vehicle, you need to have all the facts. Used cars can be masters of disguise sometimes, and you might not see any major issues until it’s too late. While some issues may not be spotted no matter how hard you look, a vehicle history report can give you a glimpse into the car’s past, so you can judge its current and future strength.
A vehicle history report gives you 411 on any issues the car might have gone to the store for. You may also be able to get your hands on the service history.
2: Visit a certified mechanic
A vehicle history report is a good place to start, but it’s as good as the information recorded by the mechanics who worked on the vehicle. Not all workshops register their service in the same universal system, and often people work on vehicles themselves to save money in labor costs for simple things like oil changes. or new brake pads. This is why it is important to take any car you are considering purchasing to a certified mechanic for a thorough inspection.
Mechanics are trained to know the ins and outs of vehicles and may be more likely to spot problems you wouldn’t even know how to look for. Also, it’s a good way to check for damage that may not be listed anywhere.
3: consider a warranty extension
Since you never know what might have happened to a car in the past, it’s a good idea to consider getting an extended warranty when financing a used vehicle. Even after a full tire inspection by a qualified mechanic, there is no guarantee of a car’s longevity – machinery failure. And, the most used are sold as is.
However, you can give yourself some peace of mind, and potentially long-term savings, by obtaining an extended service contract for your vehicle. An extended service contract covers the maintenance and some repairs of your car so that you don’t have to shell out money for problems that might arise.
Before agreeing to an extended warranty, be sure to read the coverage carefully to see what is covered and where. All service contracts vary in their specifics, so make sure you get the plan that meets your needs.
4: Don’t forget your deposit!
Perhaps one of the best things you can do for yourself as a bad credit borrower is prepare for a large down payment. Whatever your credit situation, a down payment can only benefit your auto financing situation. Paying money up front shows lenders that you are ready to have some skin in the game and that you are seriously considering terminating your loan.
Plus, when you make a down payment, you borrow less, lowering your monthly payment and lowering the amount of interest charges you pay over the life of your loan. Depending on how much you decide to deposit, you may also be eligible for a different loan term, a lower interest rate, or a more expensive vehicle.
If you are a borrower with bad credit, it is unlikely that you will qualify for an auto loan without making a down payment. Typically, subprime lenders who work with credit-distressed consumers require a minimum down payment of at least $ 1,000 or 10% of the sale price of a vehicle. Sometimes a lender will accept the lower of the two amounts, but it’s in your best interest to pay as much as you can afford.
5: Consider a CPO
If you want the maximum reliability and peace of mind from a used car, a Certified Pre-Owned Vehicle (CPO) may be the way to go. These cars go through a rigorous inspection process by a technician certified by the manufacturer and are remanufactured to be in their optimum shape as a used car. CPOs must meet strict quality, age and mileage requirements to be considered certified. They are also covered by some form of manufacturer’s warranty.
While these are still used vehicles, they are probably only a few years old and probably only had one owner. Many CPO cars are just released from rental, and most of them are a bit more expensive than non-certified vehicles.
6: go for reliability and affordability
Make sure you always consider reliability and don’t just go for the cheapest deal you can find. Remember that cars depreciate assets, so the price of their stickers tends to go down as their value goes down. However, some makes and models hold their value better than others.
If a CPO is out of your price range, try going with a vehicle known for long-term reliability like Honda, Toyota, and Subaru. Most used cars for sale on dealership lots tend to have higher mileage, and it is recommended that you go with a car that has less than 100,000 miles. Nowadays, however, as technology advances, many vehicles – especially the aforementioned brands – tend to get past that point well. A little research can help you find cars that generally still perform well, even when they hit the 100,000 mile mark.
Let us clarify your options
Here has Express auto loan, we want to help you make your next used car financing experience a smooth one. Even though used vehicles can be found at many different dealerships, not all dealerships are registered with lenders to help borrowers in all credit situations. It can be stressful to seek in vain to be refused over and over again. Instead, let us do the research for you and match you with a local dealership who has the lenders you’re looking for.
We have built an extensive network of Specialized Finance Brokers across the country who are ready to help you get the financing you need. To start the process now, simply fill out our Quick Auto Loan Application Form and we’ll get to work. The process is completely free and there is no obligation to purchase, so what are you waiting for?