The Importance of Resale Value for Car Buyers with Bad Credit

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Senior Automotive Editor

Christian Gulliksen was the Senior Automotive Editor for CarsDirect. He was formerly a senior editor with Robb Report magazine, and has contributed to publications like Worth, Variety, The Hollywood Reporter and MarketingProfs.com.

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, Senior Automotive Editor - April 26, 2016

CarsDirect Fact: Buying a car that has better resale value is money in your pocket—extra cash that you can apply to the purchase of your next car.

When you're up against the challenge of finding a car you can afford and a lender that will approve your loan, resale value is probably the last thing on your mind. But it could play an important role in the process of rebuilding your credit.

Most people who are buying a car with a bad credit auto loan are getting back on their financial feet and need to optimize every penny they spend. That's why it's a good idea to look at resale values for all of the models you're considering.

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That's because a car that's worth more when you pay it off is the same as extra money in your pocket. Let's say you're looking at two cars:

  • Car #1 costs $20,000 and will be worth $10,000 in five years when you make the last payment on your loan.
  • Car #2 costs $21,000, but will worth $13,000 when you're finished paying for it.

While Car #1 is $1,000 cheaper now, it will lose more of its value than Car #2—and leave you with a trade-in value that's $3,000 less.

This scenario would give you with an additional $2,000 at trade-in time if you buy Car #2. When you consider how hard it can be to save $2,000 while paying the rent or mortgage and all your bills, you can see how thinking about resale value now can further your financial goals down the road.

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, Senior Automotive Editor

Christian Gulliksen was the Senior Automotive Editor for CarsDirect. He was formerly a senior editor with Robb Report magazine, and has contributed to publications like Worth, Variety, The Hollywood Reporter and MarketingProfs.com.

Follow On: Google+ | Website

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