Here are the cars people with below-average credit buy when they're broke, and how to get them.
Some jobs are hard to get — or keep — without a reliable vehicle. But if money’s tight, how do you get one?
There’s always grand theft auto, but a lot of people turn to a totally different kind of highway robbery: car loans. Borrower-buyers with below-average credit account for more than half of used-car financing and a quarter of new-vehicle financing, according to auto loan company CarFinance.com.
And it turns out the cars these people buy differ from the best-selling cars in the country — probably because they need cars that are going to last long and sell well, not necessarily cars that make them look like rich, amazing, successful individuals.
CarFinance.com used 2013 data from its customers to figure out the most popular new and used cars for this group. Here’s the Top 10 new-car list…
- Dodge Avenger and Kia Optima (Tied)
- Kia Forte
- Ford Focus
- Kia Soul
- Dodge Journey
- Chevrolet Malibu
- Chevrolet Cruze
- Chrysler 200
- Kia Rio
- Nissan Sentra
Most of these are compact cars with decent fuel economy and value, CarFinance.com says. And the dominant brand in the list, Kia, offers a 10-year, 100,000-mile warranty.
But as you can see from the graphic up top, car loan payments account for two-thirds of the actual cost of car ownership. Once you factor in insurance, fuel, and other costs, you get an idea of what’s the most affordable over five years.
Want something cheaper? Buy a used car, which means a smaller loan and less money wasted on interest. Here’s CarFinance.com’s list of Top 10 used cars for bad credit…
- Nissan Altima
- Chevrolet Silverado 1500
- Ram 1500
- Ford F150
- Chevrolet Impala
- Dodge Charger
- Toyota Camry
- Chevrolet Malibu
- Honda Accord
- Ford Fusion
Interestingly, this version of the list includes pick-ups. “It’s no surprise to see three trucks near the top here, given their overall popularity in the market, their longevity and the value they offer as pre-owned vehicles,” CarFinance.com says.
Financing your wheels
Even if you know what car you can afford, there’s still the small matter of getting a loan for it. With a credit score below 600 — and you’ll have to pay Equifax, TransUnion or Experian to find out for sure — you can expect to jump through some hoops, former car saleswoman Shauna Zamarripa wrote for Yahoo News.
“When I sold cars,” Zamarripa says, “I saw some of the most challenged credit you can possibly imagine, but with a little tweaking and help, I was able to find hundreds of challenged credit customers a nice set of wheels.”
The easiest and best way to do that? Get somebody who has good credit and seriously trusts you to co-sign the loan. Then you can ride on their good name, at least until you start missing payments and wreck their credit.
There are also lenders and dealerships that advertise working with people that have poor credit, but Zamarripa recommends emailing them first to ask about the average down payment and the worst bad-credit interest rates. They’re going to be tough numbers, and you need to know you can afford them — along with insurance, gas, and maintenance.
And before and after getting the loan, work on improving your credit score. The better it is, the less you’ll pay. On-time loan payments will help bring it up, too.
Once you raise your credit score by 50 points, you may qualify for a better loan — even if you’re already paying one, Cars.com says. Even a small reduction on the interest rate can make a big difference. According to CarFinance.com, “a loan for $22,549 with an interest rate of 10 percent, rather than 12.9 percent, will save you $3,923 over the length of your loan.”
So that’s how you get the best cars for bad credit. But Zamarripa’s parting advice is worth repeating…
“Getting a bad credit car loan isn’t impossible, but as a money pro, it’s not something I would recommend doing more than one time in a person’s life. Live and learn and then live with good credit. Trust me, it makes life easier.”