With the credit crisis, very few people can purchase a car with their own money; most people are struggling. But if you have bad credit and you need a car to go from point A to point B, that can be a challenge. There are companies that exclusively furnish car loans and help people with bad credit to find one. You can also check out www.creditsources.org - this site specializes in helping people with bad credit locate funding sources.
Here are some tips to follow before you buy your car:
Buyer is King
Carmakers have cut production, but they haven’t shut down. Dealers still have to move the inventory that rolls off assembly lines, so many vehicles are going for near-invoice prices. As icing on the cake, carmakers have turned to low-rate financing and cash rebates.
Vehicle sales for the first three months of 2008 were down 8% compared with the same period in 2007. And incentives are up. For example, GM is spending $3,300 on incentives per vehicle (including cash rebates and subsidized rates and leases), compared with $2,800 a year ago, according to Edmunds.com
If you decide not to take an automaker’s low-rate offer, expect to pay 6.8%, on average, for a 60-month loan, according to Bankrate.com. You may do better at some online banks and credit unions, where interest rates are as low as 5% for 60-month loans. Visit companies that offer bad credit car loans. Their systems allow lenders to bid on finding you a car loan.
With the economy in limbo, carmakers expect even fewer sales than last year and are not likely to curtail the come-ons. If you want the best bargains along with your choice of options and color, shop before August. After that, the deals improve but selection may be sketchy.
Car Tax Credit
With the government tax deduction for the purchase of new cars in 2009, you might want to consider buying an inexpensive new car. The deduction is limited to state and local sales and excise taxes paid on up to $49,500 of the purchase price of a qualified new car, light truck, motor home or motorcycle. The amount of the deduction is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers.
In addition, if you consider buying a hybrid car look for one that is on the government’s list that allow you to file a tax credit. This is usually called a hydrid tax credit.
Purchase a Reliable Used Vehicle
The car market in Silverdale or Oak Harbor is similar to the auto loan market elsewhere for Washington car loans. The same is true for every state. Used car prices have been on a decline for about a decade, so it is advisable to purchase a used car or truck rather than a new one. Purchase one that is economical, like the Mazda Protege.
2003 Mazda Protege
Price range: $6,400 to $7,400.
Fuel mileage, city/highway: 25/30 miles per gallon.
Engine: 2.0-liter four-cylinder, 130 horsepower.
Qualify for a Loan
Here also you need to fulfill certain preconditions to be eligible for a bad credit auto loan, check out statistics and details on sites like edmunds.com and the Kelly Blue Book.
- You should be drawing a monthly salary of at least $1500 or above.
- You should be a bona-fide resident of the US or of Canada. If you are a citizen of the US or of Canada you can apply for this loan provided you fulfill other conditions.
- You must be able to furnish automobile insurance.
- Throughout the period of the loan you must possess a job that provides you with a regular income.
- Of vital importance is the proof of residence. This could be in the form of a credit card statement or a bill like that of electricity, which can be verified.
- You should also be in a position to furnish an active phone number.
Please keep in mind that car salesmen can be tricky. Do your research online and look for the fine print on your car loan document.
The author recommends www.cardownloan.com for your car loan needs, even with bad credit.