Before consumers with a substandard credit history rush out to get bad credit auto financing on a new or late-model used car, they should know several things. That older model vehicle sitting in their driveway may not be as bad as they think. Though even non-profits are entering the low-interest, bad credit auto financing arena, becoming a customer may be unnecessary.
People often consider older model used cars unreliable because these vehicles once were. Though the stereotypes endure, modern used vehicles last longer and are more reliable than even those made in 1980. Spending just a few thousand dollars on a used car that is ten to 15 years old should provide reliable transportation.
Selling a used SUV to purchase a used sub-compact car is a smart move from a fuel efficiency perspective. However, purchasing a brand new, improved gas mileage vehicle may not be. More likely, once the carbon footprint for vehicle manufacture is taken into account, the situation is a wash. The environment gets more of a boost from people who purchase used cars that are fuel-efficient and drive these until they no longer run.
Many people think that taking a car loan, even bad credit auto financing, is a decent way to rebuild credit. According to personal finance expert Dave Ramsey, rebuilding credit is only promoted by people who are broke. Individuals who do not want to live off credit should not worry about credit scores. Besides, taking a car loan to purchase a vehicle is not the best way to improve credit.
A smart approach to the situation is to gather older, reliable, used cars and provide them to people with low incomes who need to get to and from work. Goodwill does this with its Wheels-to-Work programs and finds great success. There is no reason for individuals on tight budgets to take on unnecessary debt.
