Are
you thinking of buying a car? Is your decision tilting towards buying a
new car? Before you head out to make a purchase, do give a thought to
the other option. Buying a pre-owned car may not make for an appealing
choice; but makes sense financially.
Stay away from the New; Go for the Used Cars
Who
doesn’t love the new car smell? You may have set your eyes on a new car
but here’s why you should head to the used car section at the
dealership.
Buying a New Car becomes Expensive every Year
Even
though there are several affordable car models, buying a new car and
keeping it is becoming expensive year over year. Obtaining an auto loan for buying a new car
is resulting in higher monthly payments than before. According to
Experian’s Q1 2017 data, a sub-prime borrower spends $519 on a new car
loan. And, if he seeks a used car loan, it comes down to $385. So, it
makes sense to buy a used car.
Loan Terms are getting Longer
Lenders
charge high interest rates from sub-prime borrowers. But, they try to
cover the high rates with longer loan terms. If you wish to buy a new car with super-prime credit,
the lenders will offer a loan term of 62 months. And the term is 72
months for deep subprime car borrowers. For a used car borrower with
deep-subprime, the term is 65 months. Remember that used cars are less
costly which means you will make smaller monthly payments over the
years. But, when you buy a new car with a long term, you end up paying
more in the form of interest.
The Risk of Negative Equity
Constant
rise in monthly payments and long loan terms spell a recipe for
disaster. A new car loses value as soon as you leave the dealership lot.
And, the lenders direct initial payments towards the interest amount.
It means the amount you owe to the lender becomes higher than the value
of your car. Being in an upside down auto loan
situation is very risky proposition. If the car is totaled for some
reason, you will have to pay the difference between the insurance money
and the pending loan amount. So, consider choosing a used car because of
its low value and low depreciation rate.
Let your Brain take the Lead!
Buying
a car is an emotional experience. You may adore a brand. You may have
set your heart on a certain car model. But, remember that a car is the
second biggest purchase of your life. If you listen to your heart and
disregard cognitive thinking, you will face bad credit score and unpaid
debts in the future. So, consider your financial condition, credit
score, and cash availability before buying a new car. If you think that
higher monthly payments will put an unnecessary burden on your financial
condition, go for a used car. Listen to your brain and make a practical
decision.
Buy a pre-owned car and make your purchase affordable with America’s bad credit auto loan expert. CarDestination.com will help you obtain low rate used car loan and ensure an easy car buying process. Apply now.
