20 or more years ago, the decision of whether to buy a new or used car with one of the bad credit car loans was fairly easy. New cars were, after all, new. This meant that they were more reliable because all of the parts on them were new. Most new cars came with a warranty that covered pretty much everything on the car for at least the first two years. Unfortunately, most bad credit car loans dealers would not sell you a new car because, with a 24 to 36 month loan, they were too expensive.
Buying a used car using one of the bad credit car loans available at the time was, on the other hand, almost like going to Las Vegas and pulling the lever on a slot machine. Sometimes you came up with three cherries and a very dependable car. Often, especially if the purchase was made at a “tote the note” dealer, you came up empty-handed and you inherited the problems from the previous owner(s). The buying experience was also different. Instead of looking at the gleaming new models in the dealer’s showroom, you were forced to shop on small open-air lots from salespeople that knew little about their inventories other than “she runs great” or “this one’s real cream puff”.
Since the early 90’s, larger new car dealers have started working with bad credit car loans and manufacturers have recognized the importance of the used vehicle market. Dealers have gotten into the game because the subprime car market represents a growing segment of both new and used car buyers, while national subprime lenders have used their financial clout to offer both new vehicle and used car sub prime financing with longer terms to keep payments affordable.
Did I mention certified programs? Certification involves a lease turn-in or other recent vehicle that falls within the manufacturer’s guidelines. Once the car has been inspected, the dealer can place a warranty on it that essentially extends the new car warranty for up to 7 years or 100,000 miles, depending on the vehicle and the manufacturer.
Finally, the cars, themselves, have changed. Build quality has improved greatly so that 100,000 mile cars, with the proper maintenance, still drive well mechanically and advances in corrosion resistance mean that the car body is still structurally sound. Even 200,000 miles on a vehicle does not necessarily relegate it to the scrap yard as would’ve been the case 20 years ago. This makes both new cars and used cars ideal candidates for bad credit car loans.
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