Credit Score Only Fair? A 7-Year Loan Could Work for You

The new Volvo XC90

An interesting trend in automotive financing could affect your ability to buy a new car. To take advantage, you’re going to need fair (but not good) credit and be willing to stretch the duration of your loan up to 7 years.

As outlined in a recent Automotive News article, auto loans lasting 84 months or more are currently finding both advocates and opponents in the automotive-financing world. Lenders opposed to the longer loans feel consumers with fair credit are buying too much car and are therefore more likely to eventually default.

Turns out, according to Equifax data quoted in the article, these 7-year loans are the least likely to end in default among consumers in the 630-to-680 credit range, which is considered “fair” credit.

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5 Things to Know About Buy Here, Pay Here Dealers

buy here pay here lot

This Connecticut Buy Here, Pay Here dealer has cornered the market on used Suzukis.

There’s nothing inherently bad about Buy Here, Pay Here dealers. They provide a service to those automotive buyers without good credit who sometimes need a used car in a hurry.

However, it’s important to keep in mind most Buy Here, Pay Here dealers (BHPH dealers) aren’t in business to establish long-term relationships. They’re trying to make the most profit they can from financing used cars.

Here are five things you need to know before purchasing a used car from a BHPH dealer.

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The Best Advice on Paying for a New or Used Car

2011 Mercedes-Benz

Purchasing a new or used car is always an exciting thing. Paying for a new or used car can be a difficult thing, unless you have the right advice before making the transaction.

The first thing you need to do is figure out how much car you can afford. That’s different from how much of a monthly payment you can manage. Most financial experts agree: except under extremely rare circumstances, you should never buy a car based on monthly payments.

Why? It enables dealers to sell you more car than you can afford. Financing a new car for more than 60 months—or a used car for more than 48 months—indicates you can’t afford the car.

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Ultra Long-Term Car Loans: A Great Idea!


Financing a depreciating asset is rarely a good idea. How does it make sense to purchase a $40,000 vehicle, finance it over many years, and then end up with a money pit that costs more to keep maintained than it’s worth? On top of that, not only do you have a car worth a fraction of what you paid, you’ve handed a bank many thousands of dollars for the privilege.

Very few people can afford to pay cash for a car, so financing for a few years makes sense logically, if not financially. There’s not a financial advisor on the planet who will say financing a car over 60 months is a good idea.

Unless, of course, you’re the bank or a very specific kind of buyer.

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A Magical Way to Afford Your Dream Car?

2008 Porsche 911 Targa 4S

Today I’m test-driving a Porsche.

I have two dream cars, one of which is an Aston Martin, the other is a Porsche. Not just any Porsche, but a very specific Porsche. I don’t want a Boxster. Never will I touch a 914. I could live with a Cayman S Black Edition. The car I really want, though, is a 911 Targa 4S.

My local dealer knows this, and I received an email containing a picture of a 2008 Targa 4S, along with an invite to come drive it. The problem, of course, is that there’s little chance I’ll be able to afford the ’08. An ’02 is not out of the question, but I don’t believe there was a Targa that year.

I mention this Porsche drive only because yesterday I happened to stumble across an article titled “Three Sensible Ways to Afford Your Dream Car.”

I thought maybe it was a sign. I thought maybe there was a revelation inside that would allow me to drive home in a new-to-me 911. I had high hopes.

Then I read the article. The first suggestion:

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Stretch the Car Loan or Buy a Cheaper Car?

2014 Lexus IS 350

Temptation is a seductress we all must face in our lives.

Rarely is she more powerful than the moment we step foot in a car dealership. When surrounded by shiny sheet metal and the smell of new interiors, the part of our brains responsible for good financial judgment suddenly decides to go party in the Bahamas rather than provide us with good sense in the face of temptation.

That’s why, when you step foot into a Toyota dealership to look at a base Corolla, you spot the Lexus sign across the street and wonder, “What if? How bad could the monthly payment be?”

These days, car payments are getting easier to handle because of longer loan terms. But is falling into temptation’s grip a bad thing?

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