What is the perfect vehicle for buying a car with bad credit?

Selecting a vehicle to purchase is a big deal. The vehicle you select is not only going to be in your driveway the next morning, it will also be in your driveway years from now. Not only will this decision outlast most of the t-shirts in your drawers, you will also be paying for it each month for the duration of the loan. The selection headache may seem even more daunting if you happen to have bad credit.
Don't fret.
Below you will find a brief guide, complete with explanations, to help guide you through the process of finding your next vehicle if you have bad credit. All of the listed elements are simply meant to be a guide, and other factors such as money down, monthly income, and specific lending institutions can mitigate exceptions to the guide.
Miles: When lending institutions analyze a loan application, a couple of the things they look at is both the value of the vehicle throughout the loan, as well as the probability of the vehicle staying on the road for the term of the loan. High mileage vehicles are seen as risky because as a vehicle increases in miles its decline in value accelerates and the potential for costly repairs needing to be done increases as well. Lending institutions protect themselves against the risk of a high mileage loan by declining the loan or shortening the term of the loan. Remember, when a loan has a shortened term, the monthly payment will be higher.
Look for: Narrow your focus to vehicles with under 60 thousand miles. Exceptions can be made, but this is a good place to start.
Year: The year of a vehicle plays a similar role in the lending process as miles. Older vehicles are generally considered to be riskier than newer vehicles. Many lending institutions charge a higher interest rate on higher mileage units to correct for the added risk of the older vehicle. Once again, banks are looking for vehicles that have a good chance of being in good working order throughout the term of the loan, and there is naturally an added risk of this not being the case in an older vehicle. Not only will banks charge a higher interest rate for older vehicles, they may also decline the loan altogether or shorten the term.
Look for: Narrow your focus to vehicles no older than five years. Similar to high mileage vehicles, there are exceptions but it is not recommended to look older than five years.
 
Loan-to-Value (LTV): This is perhaps the most complex of all the factors to keep in mind while searching for a vehicle. Basically, LTV refers to the amount being financed on a particular vehicle compared to the accepted market value of the vehicle. In bad credit lending, the most common value referred to by banks is the National Automobile Dealers Association (NADA) "trade" value.
For example: If a bank will allow you, based on your credit, to finance 100 percent of the NADA "trade" value of a vehicle and the NADA trade value of the vehicle you are looking at is $10,000, you would be allowed to finance no more than $10,000.

Used Car Pricing.... How Do Dealers Establish Value

Used Car Establishing value
Ever wonder if when a dealer is showing you a price if they picked it out of a hat.. Well they may have at that, and unfortunately for a long time dealers had bad standard business practices. We have brought light and clarity of thought into the process though with the advent of the internet it's easy to establish used car values and history. These are some the metrics used at Key Auto Center Of Portsmouth  

What does our best price mean ?

 

1. Market day's supply

This metric measures market supply/demand data on specific used cars, and offers a thumbnail read of their desirability among potential buyers. The goal: a 70-day market day's supply for your entire inventory of used cars. The benchmark should guide, but not strictly define, a dealer's used cars acquisition strategy. Broadly, used cars with a market day's supply of 65 days or less are often retail no brainers - that is, the balance of supply and demand data suggests these used cars will sell quickly. However, used cars with a 120-day market day's supply can also make good sense as retail used cars, depending on a dealer's ability to acquire it right and align the used cars pricing, fair amount of competing cars. The key here is striking an inventory-wide balance between highly desirable and less desirable used cars. In general, the 70-day mark indicates a well-balanced inventory of used cars.

2. Cost to market

For much of 2012, dealers complained that high wholesale values for used cars make buying used cars right more problematic. They found the cost of reconditioning and packing used cars hurt their ROI and profitability. These insights were gleaned from tracking the cost to market metric for their used cars inventories and individual used cars. The metric measures the ratio or "spread" between the dealer's cost to acquire and make a used cars ready and its prevailing retail price point.

The benchmark: Dealers should aim for an 84 percent cost-to-market metric for their used cars inventories. This creates a 16 percent spread to achieve a dealer's front-end gross profit goals. This benchmark should guide vehicle acquisitions to ensure appraisers and buyers can readily understand the relationship between the acquisition price, other costs (e.g., reconditioning) and a used cars likely gross profit potential. The old saying "you make your money when you acquire a used car" remains true today.

3. Price to market

This metric compares the asking price of a used cars to the prevailing prices of similar used cars available in a market. It's ever-more critical for dealers to offer competitive pricing on used cars to capture consumer attention. The most successful Velocity® dealers manage this metric in relation to a used cars market days supply metric and its time in a used cars inventory.

Example: A vehicle with a 120-day market days supply might be priced 5 percent less than competing units (a 95 percent price to market) during its first seven days as a retail unit. The 5 percent discount reflects the unit's lesser degree of desirability because the market days supply metric suggests a high degree of retail competition. If the used car doesn't sell in a week, a dealer would adjust the pricing to 93 percent price to market for the next seven days. The cycle typically continues until the used cars sell.

4. Inventory age

Every dealer knows it's important to sell fresh used cars fast to maximize gross profits and used cars turn. That said, I still see a lot of dealers with more than half of their used cars inventories older than 30 days. This scenario suggests a problem managing cars that don't sell right away. The causes of aging inventory are many - the wrong car, the wrong prices, too much time lost to make it retail ready. Regardless of the issue, however, dealers who maintain at least 50 percent of their inventory under 30 days of age are best positioned to maximize customer satisfaction, their inventory turn, investment ROI and profitability in used cars.
What does all this mean to you ? It means we have put a lot of thought into the value proposition our used cars represent to you, so you don't have to. The value you receive on your used cars shouldn't be connected to how savvy a negotiator you are. What you will receive here is the absolute best service, financing, and price available on used cars, every time.

Buy a Used Car Online..... Why it Can Be a Great Expieriance

Buying a car should be a fun and easy process. Its one of the last businesses left that does not allow you to just go in shop and buy what you want. You should be able to get all the  information online, including a free car fax and trade appraisal in most circumstances. Lets face it the advent of the iPhone made it an efficient market. There is no more "internet shopper" and no more monkey business. You can fact check everything. This is a great thing that we proudly embrace at the Key Auto Center of Portsmouth. Our Online Used Car Search Engine  lets you at your leasure look at 600-1000 used cars . When I say look at .... you get beautiful pictures of all parts of our used cars, you know what warranty and if the vehicle is certified. This means you don't have to do anything to receive the best possible value. All you have to do is go to Key Auto Center of Portsmouth.  or call 855-971-6146