You may have heard about this already, but it is likely that you may not exactly know what it means to you. What I am referring to is the California Red Tag Law that pertains to pre owned vehicles at your local dealership. This is a new law that went into place July 1st 2012 that will help those who do not have picture perfect credit, but still need a loan to purchase a pre owned automobile. It is definitely one of those things that will be much easier said than done, so any help should be very welcomed.

Why Used Cars is Best

Now you may be thinking that this information pertains no use to you because you plan on purchasing a new car, but there are some things that you should keep in mind. The main thing that you should know is that if you have sub prime or no credit then a new car a lot of the times is not even an option on the table. Lenders will see those in credit situations such as that as high risk and that is why it tends to be so difficult to get approved and thus will want to keep the loan amounts smaller.

Used cars are also much more cost efficient and a better investment. On average new cars will lose about 50% of their value the second that you drive them off of the lot, so if you decide to sell your vehicle a year or two later you are already at a much larger loss.

How Does this Law Help?

Basically the law exists for one major reason and that is to make sure that those who are looking to buy a used car in any credit situation to be aware of what dangers that vehicle may hold. To get more in depth, it first allows auto retailers to raise documentation and lease fees. It will also require that the dealer runs a vehicle history check on the automobile to see if it has a branded title. If it does that is when the red tag is put on to notify you that there is a history attached to this car.

While the extra fees that the dealer will tack on will not be favorable, it will be much better than purchasing the vehicle only later to learn that there are all kinds of issues because it is a flood damaged, salvaged, or other type of branded vehicle. So, for that fact it is a great law that California has placed into action.