The Best New Cars for Poor Credit
Many people with poor credit or no credit want to buy a new car, so which cars are most likely to result in an auto credit approval. To answer this question you have to tackle this problem from the view of the lender. Auto credits lenders are mainly have three concerns; they want you to have a reliable car. They want to make sure you have an affordable auto loan and they want to make sure they can sell the car for near what you owe if they have to repossess the vehicle.
Is the new car reliable?
Many people with poor credit live paycheck to paycheck and cannot afford costly automobile repairs, in fact, when costly repairs arise many consumers with credit problems have to decide whether to get their car fixed or make their auto loan payment.
You would assume that most new cars are reliable, however, most new car loans have terms of 60, 72, and in some cases even 84 months. Many new cars only have a 3 year or 36,000 mile warranty. For these vehicles, you would have to buy an extended warranty if you want to cover the vehicle for mechanical breakdown for the entire length of the loan.
even with past credit problems.
Is the new car loan affordable?
If you have poor credit or no credit score chances are your auto loan interest rate will be in the high teens or even the low twenty percent range, that being said, the lower the price of the vehicle the lower your monthly payment will be. Additionally, lower priced vehicles tend to have better gas mileage than more expensive models.
What happens if the lender has to repossess your new car?
When deciding whether or not to approve an auto loan, lenders calculate the loan to value. In other words, how much are they lending compared to the stated value of the vehicle. New car lenders use the manufactures invoice or the MSRP to establish this value.
For example, if you wanted to buy a new car an MSRP of $15,000 at full sticker price, added to that $1,000 for state taxes, $100 for license and registration fees, and another $1,000 for an extended service contract with no money down, you would be requesting the lender to finance $17,000.
If the new car had an invoice of $14,000 your loan to value would be greater than 121%. If the lender has to repossess this vehicle chances are they would suffer a great loss. On the other hand, if you were purchasing the same vehicle and asking for a loan of only $12,600, the loan to value would be at 90%, this is much more attractive to an auto finance company.
So where do you find a car to fit the pre-stated criteria. Our customers have had the best luck with new Kia cars. Not only are they moderately priced, have good gas mileage and a 10 year power train warranty, but they normally have a cash rebate that lowers the finance amount and most Kia dealers are willing to negotiate the price to near or below the invoice amount.
About Auto Net Credit
Auto Net Credit Centers are located throughout the United States inside of select new car and used car auto marts. We help people with fair credit, no credit, or poor credit qualify for automotive financing. Our service is free for consumers and the online application takes only moments to complete.
Once you are prequalified for an auto loan, you can visit a local auto dealer and shop with confidence. Since 2001, our service has helped hundreds of thousands of people with special credit needs buy a new or used car.