Bad credit car loans are easier to get than ever before, thanks to the growing subprime loan market. Almost half of all car loans today are bad credit loans, in that they are made to borrowers with FICO scores below 620.
Bad Credit Buyers Beware
Bad credit car loans come with slightly higher interest rates, which mean higher profits for car dealers and unwary buyers may wind up spending more than they have to. NADA Chairman Charley Smith admits, We recognize that many consumers may not know that the interest rate may be negotiable or that the dealer may be compensated for obtaining financing.
This is one reason many experts recommend that car buyers use direct financing. This means getting a car loan directly from the lender instead of through the dealer. Not only can they find more competitive rates on bad credit car loans, they can avoid the hassle of going through a dealers high-pressure finance office.
The difference between the interest rate on new or used car loans does not vary that much because used vehicles dont depreciate as quickly as newer models. This makes them better short-term collateral for lenders. The average used car costs less than half of what the average new car does. Thats why they outsell new cars three-to-one. However, choosing a new car gives the buyer more control over optional features, plus a warranty that lasts for years.
Hispanic Car Buyers
Some of the shoppers looking for bad credit car loans are Hispanic. The term loosely refers to all Spanish-speakers. Most Hispanics in the U.S. are descended from immigrants from Mexico and Central America. Our Hispanic population now stands at 41.3 million and is growing three times faster than the general population. Hispanics will number 47.7 million by 2010, and 60.4 million by 2020.
Hispanic buying power is growing at an annual compound rate of 8.2%, nearly twice the rate for non-Hispanics. It is projected to reach $1 trillion annually by 2010. A recent survey by The Media Audit reveals the following interesting facts when it comes to car buying:
Of the 26.1 million Americans planning to buy a vehicle this year, 4.7 million are Hispanic. Of this number, 1.9 million are planning to buy a new car.
While 29.5 percent of all adults surveyed have car loans, just 27.3 percent of all Hispanics have car loans.
Among the 4.8 million adults who plan to spend $30,000 or more on their next car, 830,000 are Hispanic.
Much of the shopping Hispanics do for cars and loans takes place online. A study conducted by eMarketer projects there will be over 16 million Hispanic Internet users in the U.S. by 2007. That equals 8.4% of all Internet users. Hispanics go online at home an average of 9.2 hours a week. Seventy percent say the Internet is the best source for comparing the prices on both cars and loans.
Among the growing number of automotive sites aimed at the Hispanic market is Prestamo Automotriz. The entire site is in Spanish. It includes several helpful articles and an application for a free loan quote. While Prestamo Automotriz specializes in bad credit loans, all credit levels are welcome.
Tags: Bad Credit Car Loans, Bad Credit Loans, Borrowers, Car Buyers, Car Costs, Car Loan, Compound Rate, Credit Car, Fico Scores, Finance Office, Hispanic Population, Hispanics, Immigrants, New Cars, Number 47, Optional Features, Spanish Speakers, Subprime Loan Market, Trillion, Unwary BuyersRelated posts
Buying a car needs not just investment but deep thought. The market is overflowing with choices and temptations. Buyers need to think, what kind of car and can I afford it?
Think, what do I need transportation for right now and what will I need two years from now? Do I want a car as a status symbol or as something that makes my life easier? Will the car be a commuter vehicle, or to transport children? Would a van with cargo space and high clearance be more suitable for a growing family? Should the car be a two-wheel or four-wheel drive? What kind of terrain will I be driving in most of the time? Go through auto magazines as well as consumer reports to get a clear picture of the world of cars.
1.Work on your finances and determine what you need to spend each month on transportation. A car should not cost more than 10% of your net pay per month. If it is more, then consider leasing a car instead of buying one.
2.Before you finalize anything, find out what the target price is. Four figure discounts are available with almost every make.
3.Never sign an arbitration clause or blank financial forms. Try and get finance from a separate source, a bank or financial institution.
4.Haggling will get you a good deal apart from shopping around for finance. The market is competitive be sure to check dealer fianc, high street, internet lenders, as well as other options.
5.Try and ensure a large down payment thereby reducing the loan to be paid. Work out your finances and choice of car such that the term of loan is for the shortest period.
6.Find out what buying incentives are on offer. These vary from audio systems to cash back offers, and 0% financing. Ask what extras and add ons will cost in addition to the price of the car.
7.Be sure to evaluate your old car independently if you are considering a trade in. Pay attention to cost to change, the difference between what the new car costs and what the old one is worth.
8.Find out about warranties, taxes, and insurance. These can eat into your budget.
9.Vet the contract well. Read the fine print. Make sure that paying off the loan before time will not carry any penalty.
10.Check out at least 3-4 dealers to gauge what the best offer is.
Test drive the vehicle before you finalize the deal and go through the car booklet page by page to understand all that the manufacturer needs to tell you. Be clear what is under warranty and what is not.
Never choose vehicle based on a picture or dream. It is not how you look in the car thats important but how well the car will fulfill your needs. Be practical and sensible; do not buy a model because the dealership is offering a holiday for two or a low interest scheme. Identify a vehicle that suits your needs before subjecting yourself to an onslaught of marketing.
Tags: Arbitration Clause, Auto Magazines, Car Buyer, Car Costs, Cargo Space, Commuter Vehicle, Consumer Reports, Financial Institution, Four Wheel Drive, Growing Family, Incentives, Internet Lenders, Leasing A Car, New Car, Pay Attention, Status Symbol, Street Internet, Target Price, Temptations, Warranties