The Top 10 Cars to Buy if You Have Bad Credit

September 15, 2009

In compiling our list we used some science and some art. We researched other research sites and looked at the key metrics like the long term cost to own a vehicle or the lowest depreciating vehicles. We also looked to our dealer partners to give us some insight into what the banks are saying about certain vehicles and if these cars were showing up in dealer’s service departments too often. We looked at trends in the industry as well.  For instance, we thought about where certain manufacturers are headed based on new product pipeline, quality improvements, and the financial stability of the company building these cars; something that even one or two years ago would not have been given a second thought.

After the dual bankruptcies of Chrysler and GM however, we thought it was at least worth considering-in fact, think how lenders were treating both of these companies when advancing for loans on them. A few large lenders knee jerked into calling for their ultimate demise by devaluing their worth over night and many more “lemming” banks followed suit. Most are now sheepishly offering the normal advance on the same lines they crucified a few short months ago, but it does play a role in the long term strategy of owning one of these manufacturers models.

Another component we evaluated was the “up and comer” look. Car lines that were really headed in the right direction and had not become too expensive and therefore could provide great bargains to customers with bad credit. So the list we present is not 100% scientific, but we feel as though our experience in dealing with consumers and in dealing with lenders provides us with information not available to other automotive sites.  And here they are:

1. Hyundai Sonata – Talk about zero to hero almost overnight…here is a company that put their money where their mouth was and backed each and every car with a 10 year 100,000 warranty.  Then they built cars so rock solid that you didn’t need to use it.  If that doesn’t make you feel good about owning it, then how about listening to J.D. Powers who ranked the Hyundai the #1 non luxury nameplate for the second time in 4 years in their I.Q.S. ahead of both Toyota and Honda.  Throw in the fact that you spend around 10% less for a new Sonata than you do the aforementioned competitors in the class Camry and Accord and the fact that after year one the depreciation on these cars is flattening out like last year’s economy and you see why it’s easy to give the Hyundai Sonata our first place vote.  Oh, and watch how the depreciation on these cars continues to slow as J.D. Powers continues to laud awards on them.

2. Toyota Camry – It was definitely tough to pick the top 3 places for our list and putting Toyota 2nd on any list is hard.  The Camry is typically a rock solid dependable car that delivers decent gas mileage, great performance and looks good.  But what we have been seeing over the last few years is a slight slip in quality in a handful of areas and as Toyota continues to pump more Camrys into fleet service, we expect depreciation to pick up in the near future.  Another slight issue is that to buy a Camry you need to come to the dealership armed with substantial cash down.  And while that is usually a good idea it may not always be possible, so you may need to prepared to be disappointed by most dealers if you are trying to do a zero down deal.

3. Honda Accord – Here is another great car that could have easily been our number one selection for a variety of reasons; great looks, high quality, low depreciation.  And if we have to give a reason why we didn’t pick it to be first it would have to be because you can’t buy one of these things for anything but well over book value.  So again, get ready to come to the dealership for a new or used Accord with a sack full of down payment money.  If you are planning on getting an Accord look for something about 3 years old or so as they tend to be a bit easier to get financed with less down.

4. Hyundai Elantra – For all of the great reasons we voted the Sonata number one we have to give the Elantra a top 5 position as well.  Especially since J.D. Powers placed it ahead of both Honda Civic and Toyota Corolla by giving it its”Highest Ranked Compact Car in Initial Quality” award for 2009.  Hyundai is just making it happen throughout the line up (i.e. Hyundai Genesis -2009 North American Car of the Year ,shows what these guys can really do).

5. Honda Civic – Much like the Accord it is a victim of its own success.  You can forget about stealing one of these any time soon. The car costs way too much used to be a good car for those with bad credit, again because of the huge outlay of cash required.  If you do find one at a price that makes sense you will be quite satisfied with your purchase.  Consider waiting for a decent rebate and buy new (may be a long wait however).

6. Toyota Corolla – As reliable as any car mentioned here and probably the most boring design on the list.  Again, consider waiting on a rebate and buy new vs. overpaying for a used one.  Toyota will most likely have higher incentives than Honda for the foreseeable future.

7. Chevrolet Trailblazer – Here is an interesting vehicle for a few reasons-over the last few years the SUV market has been on a true roller coaster ride because of the price of gas.  Most lenders can’t see around their cubicles let alone down the road, so they totally over reacted by not wanting these vehicles on their books, offering to finance ridiculously low Loan To Value figures and by doing so sent their values crashing. Well gas prices have leveled and will probably stay reasonably stable enough for consumers to never lose their taste for the flavor of an SUV.  The Trailblazer has been a consumer favorite for its look and ride quality and if you look around you can still get a great deal on one…note-act fast as they are going back up in price again on the used market the last time we checked with our dealer partners.

8. Ford Explorer – For just about all of the same reasons above, the Ford Explorer is on our list as well.  Only because of the myriad of styles and configurations (just way too many ways to buy one of these), did we put it behind the Trailblazer.

9. Chevrolet Malibu – For years here was a car that was in huge supply and reasonably low demand so they were cheap to buy, provided a basic vanilla mode of transportation, and came with a decent payment-super important for someone with bad credit who needs reliable transportation at an affordable price while rebuilding their credit.  No question all of that changed when the new body style was introduced in 2008.  The car is now a beaut and costs quite a bit more too.  Still a great car to own in the long run as depreciation is beginning to level in our opinion due to positive reviews and rising demand.

10. Chevrolet Impala – Just one of our favorites as you get a great car in so many ways… a huge car car suited for a family of five, a car that can be bought right, new or used, and a car you aren’t ashamed to show up in to the neighbor’s barbecue .  Has some minuses in high depreciation, but that means a 2 or 3 year old one gives you great bang for your buck.  Look around and you will find a deal. Buy new and keep for 4 to 5 years for best exit strategy.