Why a Used Car May be a Good Choice for Bad Credit
Due to the economic challenges many Chicago drivers have faced over the last few years, more and more Chicagoans are having to deal with less than stellar credit ratings. If you are in this situation, and looking to improve your credit score, a car loan is an excellent way to start rebuilding your credit. There are several reasons why specifically a used car may be a good choice for bad credit.
Used cars don’t depreciate like new cars. The moment you drive a new car off the dealership’s lot, it depreciates significantly. In fact, a majority of a new car’s depreciation will occur in the first three years of its life, typically. For buyers with bad credit, this means a lender may be more willing to lend money on a vehicle they know will retain most of its value through the life of the loan.
Used cars are typically less expensive than new cars. As mentioned, since new cars experience their greatest level of depreciation over the first three years of their life, a pre-owned vehicle can be much less than a similarly equipped new version of the same car. For Chicago car buyers with bad credit, a lender is more likely to fund a smaller loan amount. A used car often offers a better value per loan dollar than a new car, again further reason a lender may be more willing to undertake a bad credit loan, with the increased value of the vehicle securing the loan offsetting the increased risk of a borrower with bad credit.
Lastly, used car dealers may have access to alternate financing for those with credit challenges. For Chicago car shoppers with bad credit, traditional automotive financing through manufacturers, credit unions and local banks, simply may not be possible. To get these ultra low rates if may require better credit than some have or a substantial downpayment which may also prove to be difficult. Used car dealers often have relationships with lenders who specialize in bad credit loans. Additionally, they may even offer on-site financing, for those buyers with bad credit. If you do chose a used car, make sure you choose a good car dealer. There are several good used car dealers in Chicago some great new car dealers who specialize in used cars and used car loans. Consider talking with them first.
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