Some drivers with bad credit stick with one vehicle for years, fearing that their financial history means they’ll never qualify for a car loan. Yet in many cases, they’re actually pre-approved for a loan and simply don’t know it.
The biggest consideration with a car loan is how much a driver will be paying each month. A borrower must ensure that they can pay the loan off every month or risk doing damage to their credit history. While some are afraid of higher rates, they should realize that increases in fuel economy in recent years can help them with their car payments.
Take a car like the Chevy Aveo. In the base model, this vehicle is priced at $11,965 for the sedan and $12,115 for the hatchback – right in the range of many car loans. Yet this car comes with a combined EPA rating of 35 miles per gallon.
If a driver’s car is older than five years, it’s unlikely that the vehicle’s fuel economy can compete with that. And savings at the pump means more money to put toward a car payment. Most drivers put about 1,000 miles on their car in a month. With an increase of 10 miles per gallon over an older car, drivers are buying about 13 gallons less gas per month and saving around $35 at current prices. And that’s money that can go directly toward paying off a new car loan.