Why You Should Buy A Used Car

With the economy at an ebb and gas prices at an all time high, car manufacturers are having a difficult time selling new cars and are dropping prices to lure customers into buying new vehicles. Car sales across the county have weakened significantly in March, dropping 11 per cent below a year earlier according to the latest Global Auto Report.

Therefore, if you are in the market for a vehicle you could get an outstanding deal on a new car. But, is it wise that you buy a new car, particularly if you have bad or little credit?

Although interest rates on a new car is usually a little better than the interest rates that are charged for used car loans, the new car cost much more and could be a strain on your budget. In the case of bad credit car buyers, the interest rates on car loans can sometimes be higher than 10 percent.

Encouragingly, due to the ongoing credit crunch that has resulted in a cut into vehicle demand by reducing not only the number of auto loans, but also the loan value and the length of the term, used car prices are falling. In fact used car prices have been on the decline sine late 2006 and this decline has accelerated through 2008.

In addition a major disappointment with purchasing new cars is that a new car loses 15 to 20 percent of its value from the time it leaves the auto dealership.

A word of caution: owing to the fact that interest rates can make a big difference in loan payments and that interest rates are charged based on your credit score, please check your credit report for errors. You can get a free credit report from any one of the three credit bureaus: Trans Union, Experian and Equifax .