In order to get the best auto loan for used car, you need to verify multiple financing sources so that you can find the best deal for you. You can get used car financing services from basically the same lending sources that offer financial services for new car customers, including banks, online lenders and car dealerships. In most cases, a used car loan will involve a higher interest rate in comparison to a loan for a new car. In addition, a typical used car loan will require a higher down payment from the customer.
If you are interested in a “certified pre-owned” car, you can get the financing directly from the dealership. It is very important to finish all of the negotiations for the acquisition of the used car before getting into the financing arrangements with the sales person. When he tries to get you to say to him “what type of monthly payment” you want, it means that he will most likely use the info you will give him in order to manipulate the other terms of the deal so that you will pay more than you need, it is a very common situation and for this reason you need to be very attentive when dealing with the salesperson as he will try to get more money from you.
It is recommended to get a used vehicle financing commitment on the Internet prior to making a deal by verifying the car loan terms as well as the interest rates and apply for a pre-approval. By doing so, you will be able to play this commitment off against at the dealership so that you will be able to obtain the most convenient deal available.
Don’t forget about other alternatives if you plan on acquiring a used car as there are many lenders, and here we include auto dealerships also, that will offer you a more affordable interest rate for a new car in comparison to a used one. If you are in a situation from which you can obtain a competitive interest rate from the bank, you will be in a better place for obtaining the best rate available from the auto dealership.
It is advisable to economize on your used car acquisition by getting a short-term loan. As we mentioned at the beginning of the article, a used car loan will require a larger down payment (in terms of percentage) and higher interest rates which means that it can be quite expensive to pay this amount of money for 2-3 years. It would be a good thing to make the loan for 6-18 months as you will be able to save a lot of money and at the same time have the pleasure of driving the car after the loan has ended and the car is finally yours.
When you start discussing your financing options you need to know your credit score. If your score is above the 680 mark, you are entitled to get fair financing terms. Before looking for a loan, you should strengthen your credit score. For this reason, you should check it with Equifax, Trans Unsion or Experain and repair any mistakes that might have occurred. Pay off any late items or high balances that could affect your credit in a bad way.
For those of you that are thinking about getting a used car from a certain car lot that it isn’t associated in any way with the automaker’s dealership, it is advisable to avoid those “we tote the note” financing deals. You should look for auto loan for used car services at your bank, where you will be safer with your savings account or personal checking.
If you plan on purchasing a used vehicle from an individual person, figure out your options for acquiring a person to person car loan. By choosing this type of loan, you will be able to pay for the car entirely and after that, repay the bank or other financial institution with monthly installments. You need to be aware of the fact that some of these credit institutions that deal with these loans will ask you for higher rates. Also for this situation, ask the owner of the vehicle to do a complete mechanical verification of the car and make sure that the car is fully functional before starting the loan process.
Some people choose to get special insurance for covering the difference between the loan amount and the value of the vehicle. By getting this type of insurance, you will be able to pay back the used car loan in the unfortunate event if something wrong happens with the car and the insurance value is less in comparison with the amount of money you loaned. Regardless of the type of loan you choose, it is highly advisable to keep its lifetime to a minimum so that the car will outlive the loan.
Most of the banks do not give money for cars that are older than 4-5 years. In most cases, the bank will charge a 2% minimum higher APR on a used car loan in comparison to a new automobile. However, online lenders are way cheaper and their used car loans are very close to the new car loans.
Remember to always test drive the car and ask for a thorough inspection before purchasing it. For this reason, it is advisable to get an independent third party to do a full checkup of the car and find out if there are any potential problems that might occur after the deal has been made.
Regardless of the financing option you choose, get auto insurance quotes to figure out how much money you will have to pay for insuring the vehicle. Visit websites like LowerMyBills, GEICO, Allstate or BestCarInsuranceSite to obtain free car insurance quotes. If you can afford, get an extended warranty for the car so that you will be covered from any problems that might occur in the future.
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