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Consider Buying a Used Car with Bad Credit

Even though you have damaged credit, you really need to buy a car. However, you are still set on buying a factory-fresh vehicle and are sceptical of a used car.

For many, the appeal of buying new comes from not just getting the latest and greatest, but also the peace of mind that comes from getting a car with a full factory warranty. However, you will still be faced with a high interest rate due to your bruised credit rating. You could try to work around the higher interest charges by purchasing a smaller, less expensive vehicle. But is this the best decision?

For a moment, let's say that you get approved for an auto loan on a new car. There are two things to consider:

  • The high interest rates will result in a higher monthly payment.
  • It will narrow your selection of new cars to a chosen few that may not meet all of your needs.

When you're struggling with credit issues, you should try to make the most of what you have, and buying less car for more money probably isn't the best plan for you. Opening up to the idea of a used car can widen your range of vehicle choices.

A Case for Buying a Used Car with Bad Credit

If you only go back a few model years, you can find some good deals on Certified Pre-Owned (CPO) vehicles. They can be significantly cheaper, and still offer you some of the more recent advances in safety technology, as well as other modern-day perks. Also, you could find that your loonies go further with a used vehicle, allowing you to possibly purchase a larger vehicle that suits your needs better than a new, smaller vehicle with only the starter features.

Used Car

Next, let's talk about the value of a new car. Did you know that a brand new car loses at least 9% of its value the moment you drive off the lot with it? Not only that, but it loses an additional 6 to 10% in value by the end of the first year of ownership. This means that you run a very high risk of being upside down on your loan.

Of course, we aren't saying that used cars don't decrease in value over time - they do, but at a lower rate. But, in the case of a pre-owned vehicle, the previous owner already took that significant hit in value during the first years of ownership.

While an appropriate down payment can help mitigate the drop in value on a new vehicle, that money may be better utilised on a used car, making it easier to trade in or sell once you have rebuilt your credit and are in the position to get a more favourable interest rate on your "dream car."

Make the Most of It

The team here at Canada Auto Loan can connect you with a dealer who can help you. We want you to be happy with your car, both performance-wise and financially. And we have the experts that can help you make that a reality. Simply fill out the fast and secure online application to get started. We can't wait to help!