Buying a new car may be your best bet even if you need a bad credit car loan. Here are four good cars that will help you reestablish your credit with the least amount of pain.
New versus used
There are a number of things we’ve learned about the bad credit car shopper in the last seventeen years here at Auto Credit Express. One of them is this: When it comes time to buy a car, people with bad credit often decide in favor of a used car because they believe used cars will have lower monthly payments.
Looking at just the cost of the vehicle, this is largely true. There are, however, other factors to consider other than just the price of the car. These other factors include such items as the total cost of ownership, lender rates, and the cash down payment amount required in order to get approved for financing.
• Aside from available rebates, new cars are under factory warranty for at least 3 years and 36,000 miles. For similar coverage on a used car you would have to pay extra (for a service contract). Some manufactures, Kia for example, protect their cars for 10 years and 100,000 miles. If unexpected repairs are necessary, having a factory warranty will lower your ownerships cost when compared to a used car.
• It’s a fact that lenders (even subprime lenders) offer better rates and longer repayment terms for new cars than they do for used cars. A longer time to pay off your purchase at a lower rate equates to a lower monthly payment.
• If you have bad credit, most subprime lenders will require a cash down payment. Many new cars come equipped with a built-in down payment called a rebate. Cash rebates are not available on used cars.
The following list shows four examples of new cars that have a low sale prices, long warranties, and/or manufacturer rebates:
• The Chevy Aveo retails from $12,685 and has $1,000 cash back in most areas. The one drawback to the Aveo is that it has just a basic 3 year/36,000 mile limited warranty and a 5 year/100,000 mile drivetrain warranty.
• The Kia Rio retails from $11,145 and has a $1500 cash back rebate in most areas. The Rio has a basic 5 year/60,000 mile limited warranty and a 10 year/100,000 mile drivetrain warranty.
• The Hyundai Accent retails from $10,290 and has a $1500 cash back rebate in most areas. The Accent has a basic 5 year/60,000 mile limited warranty and a 10 year/100,000 mile drivetrain warranty.
• The Kia Spectra retails from $14,200 and has a $3,000 cash back rebate in most areas. The Spectra has a basic 5 year/60,000 mile limitd warranty and a 10 year/100,000 mile drivetrain warranty.