Car buying has really changed in the past 3 years

Be sure you understand what’s happened in the car market before you start shopping

If you are a first time car buyer or if you haven’t bought a car in a few years, especially the past 3 years, it’s important to know that things have changed noticeably. Many of the changes are due to the bankruptcy of General Motors and Chrysler and the bailout of the automotive industry by the US Government. It’s fair to say that today’s retail car market is nothing like it used to be! By far the biggest difference versus a few years ago is that the prices are way up on both new and used cars, especially used cars. Be prepared for sticker shock! To get a better understanding of what to expect, let me answer a number of questions that I hear most often from those getting ready to look for their next car.

          Q. Is it better to buy a new or a used car?

          A. There’s no simple one liner answer to this question but generally, my feeling is that you can more often get more car for your money when you consider a used car.

          Q. Why do you say a used car is a better buy?

          A. There are several reasons. First, used cars today are very reliable. Cars are made better by the manufacturers and carry better warranties, as well as, extended warranties.  They are also cheaper. A three year old car with say 35000 miles is often a better financial buy than its brand new counterpart.

          Q. Is it difficult to finance a used car?

          A. The short answer to this is that it isn’t. There’s a huge used car financing market that consists of banks, car dealers and finance companies that are eager to provide financing for used cars.

          Q. What if my credit isn’t the best; can I still finance a used car?

          A. You certainly can. Part of that huge financing market I was referring to above is set up specifically to work with those who have credit issues. They actually prefer to work with those who have credit issues versus good credit.

         Q. Why would someone want to work with those with bad credit? Isn’t it harder?
         A.  Don’t forget that those with poor to bad credit pay marginally more in interest rates for auto financing than those with good credit. Some lenders, especially those very experienced with poor credit, would prefer to work through the issues and get the higher interest rate. It gives them a greater reward for their effort.

         Q.  If I have poor to bad credit, what is the most important thing I can do to insure that I get financed?

         A.  There’s probably not just one single thing you can do but rather it’s a combination of several things, none too hard, that will insure that you end up with a car loan especially if you need a bad credit car loan.

         Q.  What are the things I need to do?
         A.   To make a short list it would include:
                                a. Know your credit score……… you can get a copy for free
                                b. Work with lenders who know how to finance bad credit…….. the internet is full of them
                                c. Be willing to put some time into the process and shop around
                                d. Be flexible on the make and model of car you are willing to purchase
                                e. If there’s any way possible, try and put some money down on you purchase

         Q. How much should my monthly payment be?

         A. As a rule of thumb, particularly if you have poor to bad credit, try and keep your payment to about a third or less of your average monthly disposable income. This will allow for unforeseen events to occur and you will still be in a position to make your payment. Remember not to let your eyes get bigger than your wallet when you start car shopping!