Over half of all automobile purchases in Canada are financed. Couple this with that fact that 11 million Canadians have credit problems and you see why there’s such an interest in bad credit automobile loans.
While carrying higher interest rates than prime loans, bad credit automobile loans are not difficult to get. Even individuals who have filed for bankruptcy can find a respectable deal on auto financing in the event that they shop around. It doesn’t matter in the event that they buy new or used.
The danger in purchasing new is getting “upside down” on the bad credit automobile loan. One way to keep away from this is to have a respectable down payment—20% or better. Another way is to select a vehicle with high resale value. This will help slow down depreciation.
Bad Credit automobile Loans – purchasing New
For peace of mind, safety and hassle-free driving, there’s nothing like purchasing a brand new automobile. When you buy new, you have more control over optional features than in case you buy a pre-owned vehicle. You will also receive a brand new warranty that lasts much longer than the extended warranty you can buy for used cars.
Depreciation is the difference between the Manufacturer’s Suggested Retail cost (MSRP) when you bought the vehicle and what it’s now worth. A $25,000 automobile will depreciate an average of 15% the first year and between 7% and 10% yearly for the next two years. Cars with a prestigious nameplate hold their value longer and are less likely to depreciate faster than the automobile loan.
Bad Credit automobile Loans – purchasing Used
purchasing a used vehicle makes sense in case you require to keep your every month payments affordable. Since used cars depreciate slower than new cars, they make better short-term collateral for lenders. However, some lenders will decrease the loan’s term and increase the rate on bad credit automobile loans.
Getting a used vehicle from a private party will be cheaper than purchasing the same automobile from a dealership. Here are a few questions you’ll require to ask the seller:
When you buy used, you have the chance to receive a more pricey model than you could afford in case you bought it new. For about the same amount, you could own a brand new Hyundai, a two-year-old Taurus, or a six-year-old BMW.
First Things First
With the ease of the world wide web application method at sites like Buy A Auto, you can pre-qualify for a bad credit automobile loan before you start shopping for a vehicle. Make positive to borrow enough money to cover all the costs associated with the acquisition such as dealer prep charges, in case you are purchasing new, license plates, title and registration fees, etc.
– 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?
keep in mind that total cost is more important than the every month payment. Stretching the length of a bad credit automobile loan will mean paying more interest. for example, 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.