Facing the facts, it is well known that bad credit will make investing in a vehicle tougher, but with dealers becoming more flexible as the need for cars becomes more essential to our society, it is far from an impossible feat. Bad credit car loans are more easily accessible than ever, and the risks are manageable as long as you are willing to stay on track financially from now on. Bad credit car loans are a great way to give drivers a second chance because nobody deserves to go without a car due to past mistakes.
How are Cars Essential?
Even though people centuries ago made due without cars, today they have become a requirement if you want to be a functional member of society. Not everything is within walking distance for most people, and while public transportation is always an option for most areas in the nation, unless you live in a city with a consistent transit system the burden can become unbearable very quickly. You also need to consider the fact that you don’t want to have to bring kids, pets, or excessive cargo on buses or trains that often if that is what your lifestyle requires. Even job applications will now often list that you need a “reliable means of transportation” in order to get the job. Everyone needs to shop for their daily provision, everyone needs to get to their place of work or study, and everyone needs a way to embrace everything this fascinating world has to offer or else risk harmful stagnation, and the only way to do that is with a vehicle.
Car Investments Types
Car investments come in many shapes and sizes, and it’s good to understand them all before choosing how you would like to spend your hard earned money. Most drivers understand that there are used and new cars, but let’s dig a little deeper.
Used cars are the most reasonable option for those who are suffering from bad credit but need a means of transportation. Used cars are more affordable than any other option and offer a larger variety of vehicles that includes practically any model in existence opposed to only offering what is being manufactured at this time. Deprecation and insurance values are often lower when it comes to used cars because they cost less to fix which makes them even cheaper. There are a few downsides to used vehicles though. There is always the risk of getting a lemon, but that can be avoided through research, inspection and guarantees. You will also need to be willing to give up a few amenities since they are not as easily customizable.
New cars are appealing with their new car smell and fancy features, but you must always ask yourself if they are worth it, and if you have bad credit that answer is almost always no. Used cars a much cheaper, and often times you will be able to find one that suits your needs just fine with very little sacrifice.
Leasing a vehicle is basically just another term for renting it at a reduced price. Leasing can be an option for those with bad credit if you find a dealership willing to take on that risk, but it involves a lot of risks on your part as well, and you won’t even get your own car out of it.
Certified pre-owned vehicles are simply newer used cars that have been tested for quality by the dealership or manufacturer in order to display them as basically new. They are a great value in general, but if your credit is suffering, you will most likely want something that is cheaper than these.
Bad Credit Financing Tips
- Spend as much time and money as you can manage to put down a sizable down payment. Your credit history will limit you a lot, but a down payment may help you widen your selection by offsetting interest, taxes, and additional fees.
- You will want to be sure that you know everything you can about your own financial history as well as the loan provider you are considering, especially interest rates, before investing in anything. Know what you can manage and know what they can offer someone in your position even before looking at any paperwork. Knowing this information will show providers that you are serious about this loan, and will leave you confident that you are making a good deal.
- Never stop working on your credit score. Even if you need to invest in a vehicle only a month from now, you will want to take that month to show reliable credit usage so that you can display increased responsibility to your loan provider. This means that you will need to avoid buying items that can impact your credit. Bad credit car loans should be considered a second chance, not a free pass.
- It is always good to have as short a loan term as possible. This can lower the cost of interest rates, but be sure to only take on a loan period you are sure you can handle. Also if you can afford to make additional payments from time to time that will help you out in the long run even more.
- You need to be willing to bend a little on features and add-ons if you are struggling with your budget and credit. The main issue many people have with this is safety features, but safety features in used cars can be just as reliable as they are in used cars. Many new cars have only added active safety features for preventative measures on top of the passive safety features for protection. It is all about knowing what you can manage, and holding back the impulse to invest in what you can’t.
- Don’t be afraid to really shop around for your loan. You should treat investing in a loan the same way you treat investing in a vehicle, both research, and effort in order to find one the best one for your situation. You should also never stop trying to get approved because eventually, you will find a dealership or provider that is willing to work with your bad credit.
Bad Credit Financing Risks
While bad credit car loans are an excellent way to give yourself a second chance, you must also realize that they come with their own set of risks. This only makes sense considering that providers are taking a risk on you by offering you this loan. The main way bad credit car loans are able to do what they do is by increasing the interest rate in case you fall into bad habits again. If you pay on time and keep everything in order, this shouldn’t be too big of an issue, but it is one you must consider before agreeing to take on a loan with bad credit. You will also have to be comfortable with providers paying extra attention to your payments. No misstep will be undocumented, so you want to be sure you can handle being monitored more so than those who have good credit scores.
All in all, bad credit car loans are a great way to provide drivers with a second chance and the means to get the vehicle they need.