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Keeping your credit score above average is crucial in maintaining and supporting the lifestyle you want. However, unfortunate things may happen to those trying their hardest. People succumb to the worst of fates after losing a job or falling ill. Some bills will be left unpaid, and credits will be pushed to their limits, resulting in bad credit.
Unfortunately, bad credit can make things quite difficult, especially when getting the things you need, such as a car. However, having bad credit isn't the end of the world for those planning to purchase a used car or even a new one. You just have to be aware of the proper guidelines so you can get a car even with a below-average credit rating.
Although applying for car loans with bad credit is difficult, that doesn't mean it's impossible. You can still get car loans through indirect lenders who interact with direct lenders on your behalf. If interested, you may try the Bad Credit Car Loans by Naked Loans or any local private lending companies nearby.
Now that you know your options, it's time to find out the types of cars you can get with a bad credit rating. Here are some of them:
1. New vehicles
Buying a new vehicle with bad credit is quite difficult, but it's not impossible. New cars are far more expensive than old, pre-used vehicles. Going for the lowest interest rate is probably unlikely due to your bad credit, which may increase the overall costs you have to settle.
In most cases, borrowers stretch out their payment terms to lower the amount they have to pay monthly. However, this isn't a good idea. The more you extend your loan, the more interest charges you'll need to settle.
Also, you have to understand that qualifying for a car loan won't necessarily get you the car of your dreams. That's not how the loaning process works. Instead, you'll be placed in a credit tier system, meaning you're only eligible for a car based on the price range stated in that tier where you belong.
Furthermore, getting a new vehicle includes a manufacturer's warranty, the latest safety features, and advanced technology. However, it often depreciates quickly, which means you may owe more compared to your car's worth after a couple of years.
2. Used cars
Used cars are often ideal for most car buyers with bad credit. Although they have lower selling prices compared to newer models, they might be more expensive when it comes to interest costs. Therefore, think and weigh your options carefully before you proceed.
When you're planning to purchase a used automobile, be aware of the minimum amount of financing lenders often require. This doesn't mean that you won't be able to get a more expensive model. However, it does mean that the car's value or the amount you want to borrow has to be at least that much.
In addition, lenders have set a standard to follow when it comes to the car's age and mileage, but that may vary from one to another. Usually, it has to be around 100,000 mileage and ten years old-no more than that. Also, keep in mind that used vehicles are offered and sold as-is. So, make sure to inspect it carefully and test drive it as much as you need.
Furthermore, ensure the vehicle is further checked and inspected by a certified auto mechanic. In this way, you can be sure that it's in good working condition and is operating accordingly. Also, used cars have already experienced a big drop in their value, and they could depreciate more. Therefore, you might not earn more when you plan to sell it in the future.
3. Certified pre-owned vehicles
Certified pre-owned vehicles (CPO) lie between the boundary of new and used cars. These cars are relatively old models, no more than seven years old, with some 3-year-old off-lease units. In addition, CPO vehicles have around 60,000 to 80,000 mileage and are certified by their manufacturers based on an in-depth inspection.
CPO vehicles usually get refurbished to their general specs to meet their manufacturers' requirements. However, these additional expenses are usually worth it, as CPO cars are often updated to today's technology standards.
Furthermore, they come with a service warranty, which allows you to get your car repaired at any same dealer in the country at little to no cost.
Although applying for car loans can be difficult, it's not impossible. All you need to do is know your financing options, which are, in most cases, private lending companies.
Once your application with these lenders is approved, you can start finding the right car fit for your budget. You may choose between a new car-prices are limited based on the tier where you belong, a pre-owned car-inspect it carefully before you agree, and CPO vehicles.