Thanks to the growing subprime loan market, getting a car loan with bad credit is easier than ever. Nearly half of all car loans given out today are bad credit loans, meaning that the borrower's FICO score is below 620.
"Buyers with bad credit, beware!"
Car loans for people with bad credit have slightly higher interest rates. This means that car dealers make more money, and buyers who aren't careful may end up spending more than they need to. NADA Chairman Charley Smith says, "We know that many consumers may not know that the interest rate may be negotiable or that the dealer may be paid for getting financing."
This is one reason why many experts recommend "direct financing" to people who want to buy a car. This means that you get a car loan from the lender instead of the dealer. Not only can they find better rates on bad credit car loans, but they can also avoid having to deal with the high-pressure finance office of a dealer.
The difference in interest rates between loans for new and used cars is not that big because used cars don't lose value as quickly as new ones. This makes them better collateral for short-term loans. The average price of a used car is less than half the price of an average new car. That's why they sell three times as many as new cars. But when someone buys a new car, they have more options for extra features and a warranty that lasts for years.
Hispanics who buy cars.
Some people who want to buy a car but have bad credit are Hispanic. All people who speak Spanish fall under this term. Most Hispanics in the United States are related to people who came from Mexico or Central America. Our 41,3 million Hispanic people are growing three times faster than the rest of the population. By 2010, there will be 47.7 million Hispanics, and by 2020, there will be 60.4.
Hispanics' buying power is growing at a rate of 8.2% per year, which is almost twice as fast as non-Hispanics. By 2010, it is expected to reach $1 trillion per year. The following interesting facts about buying cars were found in a recent poll by The Media Audit:
- Only 27.3 percent of Hispanic adults have car loans, even though 29.5 percent of all adults surveyed have car loans.
- About 4.7 million Hispanic Americans are among the 26.1 million Americans who want to buy a car this year. About 1.9 million of these people want to buy a new car.
830,000 Hispanic adults are among the 4.8 million adults who plan to spend $30,000 or more on their next car.
Hispanics do a lot of their shopping for cars and loans online. A study by eMarketer says that by 2007, there will be more than 16 million Hispanic Internet users in the U.S. That's 8.4% of all people who use the Internet. Hispanics spend an average of 9.2 hours a week online at home. Seventy percent say that the Internet is the best place to compare car and loan prices.
Prestamo Automotriz is one of the growing number of auto sites for the Hispanic market. It can be found at http://www.prestamoautomotriz.com. The entire site is in Spanish. It has a number of helpful articles and a form for getting a free loan quote. Prestamo Automotriz specialises in loans for people with bad credit, but people with all kinds of credit are welcome.
