If you have below-average credit or even no credit at all and are looking to get a loan for a used car in New Jersey, the news may be better than you think.

When you apply for a loan, the first thing a lender will look at is your credit score. Although each bank has a different categorization system, if your score is below 620 you may be classified as a subprime borrower.

With new options known as “bad credit car loans,” purchasing a used car can be painless and will actually give you an opportunity to improve your credit score with each payment.

Car loans can be much easier to obtain than personal loans, according to CarJunky.com. Should you default on the loan, the lender can simply reclaim the vehicle.

For subprime borrowers, a down payment or a trade-in may be necessary. The more you can pay up front, the better chance you have of obtaining a loan.

Although interest rates may be higher for subprime borrowers, many lenders will allow you to re-finance a loan after a one to two-year period. For each payment you make, your credit score will improve.

Although used cars are often times more affordable than their newer brethren, buyers may not be able to pay the entire cost of a used car in New York at the time of purchase, which necessitates loan considerations.

One way to reduce the costs of getting a loan is to cut out the middlemen of online loan providers, the affiliate agents who drive web users to various direct lenders, reports AutoCreditExpress.com. That can save on the overhead of the affiliate’s profit margin, and if applications are made within a couple days of each other, one’s credit score will not be negatively impacted.

However, those with bad credit may benefit from a firm that could advocate for them, like the website itself, since tightened credit requirements have made some lenders wary of buyers with shaky financial history, notes company blogger Steve Cypher.

Interested consumers could also take advantage of the financing and leasing trade associations in the UK, which offers a common sense guide for buying a car that includes information germane to most developed countries, according to Contracthireandleasing.com.

“Buyers often focus on the make and model of their next car, and how to pay for it is a distant second,” Paul Harrison, FLA head of motor finance, told the website.

Steve Williams writes for AutoWeek, Newsday and other media platforms covering cars and the automotive industry. In a recent interview he said that used cars in New Jersey are a better bet than new cars or leasing.

“Used cars have more attractive price points initially, of course, and this year a lot of cars are coming into dealers off lease, so larger inventories in used-car lots give dealers more incentive to move them out quickly,” he said in a Minyanville.com interview.

Williams also added that attractive financing options limit the appeal of leasing, since a low interest loan will provide the same affordable initial price to own, but also give buyers ownership of the vehicle rather than having to give it back, according to the website.

New cars could receive another blow in appeal to consumers now that the government’s Cash for Clunkers program has ended and the $4,500 rebates are no longer available. Although some automakers are continuing to give discount, many promotion programs have lost about half of the savings they initially offered.

Comerica Bank recently issued a report on the costs of purchasing a new vehicle, and while the affordability index has remained relatively unchanged, it still takes 22 weeks’ wages to purchase a new car, compared to lower prices for used cars in New Jersey.

The financial institution said that the numbers are actually slightly higher this quarter, as dealers and automakers restrict some of the affordable lending options initiated during the financial downturn to boost sales.

“Reflecting the partial normalization of credit markets, the average rate paid on a car loan at finance companies was only 3.45 percent last quarter, the lowest level seen in five years,” noted Dana Johnson, Comerica Bank chief economist.

However, incentives like attractive financing and the Cash for Clunkers program are unlikely to last, as Congress and the Obama administration are looking to put Chrysler and General Motors onto a comfortable profit margin with limited incentives to buyers before selling the public’s stake in both companies.

Resistance from Republican lawmakers, as well as some Democrats and environmentalists, could also limit future funding for the Cash for Clunkers program, making used cars in New Jersey a more affordable option for some buyers.

There may be no rush for buyers to take advantage of deals offered in conjunction with the Cash for Clunkers program now that Congress has approved an additional $2 billion for new car purchases, and that may give potential owners enough time to consider the cost savings of keeping a used car in New York.

Edmunds.com, an automotive research site, reported that the deal is likely to decrease demand in the program designed to spur buyers to consider new cars with higher fuel efficiency ratings, because a surge in purchases was based on buyers worried when the funds would run out.

“Now that additional money has been approved, the rush to make a deal will not be as urgent,” says Jeremy Anwyl, the site’s CEO. “This program would have made more sense to continue in October when the traditional summer selling season is over.”

While the savings range from $3,500 to $4,500 when one doesn’t include dealer incentives, it may not make sense for buyers on a strict budget to go after a new car as part of the program.

“The majority of Americans cannot afford a new car payment today, but they probably can afford to trade up to a newer used vehicle or make their current vehicle more fuel-efficient,” said Kathleen Schmatz, Automotive Aftermarket Industry Association president and CEO.

AAIA says that routine maintenance of older vehicles over the span of a year would cost owners less than one monthly payment on a new vehicle, and they say that the program entices consumers who may not be able to afford the cost of such purchases.

Instead, holding onto one’s used car in New York or an upgrade to a newer model allows consumers to retain the value of their vehicle once the program is completed, and they can then trade it in or donate it when they are looking to make their next purchase.

Fuel efficiency can also be improved with maintenance, without the need to purchase an all-new vehicle, according to the AAIA. They say that up to 12 billion gallons of fuel each year could be saved by performing routine oil changes and other repairs. That would be the equivalent of the yearly usage of motorists in Illinois, Michigan and Connecticut, and 166 times the fuel savings government analysts estimated for the Cash for Clunkers program.

Automotive financiers say that buyers considering used cars in New Jersey can benefit from making sure they understand the terminology surrounding loans and credit options before they sign their names to a contract.

Start by checking with outside loan agencies like credit unions or banks where one has an account to determine what interest rates are available, says industry group Americans Well-informed on Auto Retail Economics. Consider increasing one’s down payment as a way to lower the rate, or APR.

When one has an idea of what monthly payment is affordable based on his or her budget, AWARE recommends sticking to that number. It may be easier to negotiate the interest rate and lower monthly payments there as opposed to haggling over the purchase price of a used car in New Jersey.

Extras like credit insurance or extended service warranties are often offered at this point in negotiations, the coalition notes, but determine whether they are necessary beforehand and stick with that decision, it says.

Consumers “will get the most out of their vehicle financing experience if they do their homework,” says Eric Hoffman, AWARE spokesman.