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If you have bad credit, buying a car can be a challenging experience, but it’s definitely possible if you make the right choices and purchasing decisions.
One of the first things to think about is whether to try and buy a new or used car. As you would expect, each option comes with its own advantages and drawbacks. A smart move would be to take a look at what’s available to you by using a search term like bad credit car dealerships Utah to check the cars and finance deals on offer.
To help you decide which option is best for your financial situation, here’s a closer look at the pros and cons of both new and used cars when buying with bad credit.
Buying new is harder when you have bad credit
You might think that a new car may seem out of reach if you have bad credit, but financing options are available.
One of the main advantages of buying a new car is the potential for lower interest rates. An obvious downside to having bad credit is that you will often be charged a higher interest rate on the loan. You can find that some manufacturers offer special financing programs for buyers with less-than-perfect credit, so it may be worth seeing what’s about.
Issues to think about when buying new
New cars are more expensive to buy. This means larger monthly payments and higher interest charges to pay over a longer time.
Depreciation is another significant factor. A new car loses a substantial portion of its value as soon as you drive it off the lot. On top of that, stricter loan requirements may apply, meaning some lenders could require a larger down payment or a co-signer due to your credit score. All things considered, buying new might not be the best move if you have bad credit.
More options and affordability when buying used cars
It’s easy to see why used cars are a popular choice for buyers with bad credit because they typically cost less and have lower financing requirements.
Quite simply, a lower purchase price means having a smaller loan and making lower monthly payments. This should make it easier to afford with more realistic and manageable payments.
Another strong selling point is that, unlike new cars, used vehicles have already gone through the steepest depreciation period, allowing them to hold their value better over time.
Not only that, but many lenders are more willing to finance used cars for buyers with bad credit since the loan amounts are smaller and pose less risk.
A few things to think about when buying a used car with bad credit
Despite these obvious advantages, buying a used car also has a few downsides to be aware of. Mainly, that interest rates for used car loans tend to be higher than those for new car loans, especially for buyers with bad credit.
You should also think about the car’s age and condition as you might face costly maintenance and repairs sooner than you would with a new vehicle.
If you have bad credit, the bottom line is that if you want to minimize debt and avoid rapid depreciation, a used car is likely the smarter choice. Check out what is on offer at a bad credit dealership and find a deal that is right for you and your finances.
Photo by Dylan Gillis on Unsplash