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How To Apply For A Used Car Loan

Cars are some of the most expensive acquisitions you could get. If you don’t count the house or the investment in education, a car will be the priciest purchase you will have. While used cars can be real bargains, some of them can still be quite expensive. Lucky for the ones that can’t afford to buy a used car outright, there are various loans available for the sole purpose of purchasing a used car. The application process is just about the same as you would do with a new car, the only things that will vary will be the rates.

So you want to get a used car loan. Well, first of all you need to know where do you stand with your credit. A clean credit history (which automatically brings a good credit score) will get you in a car faster than you can say “loan”. Use one of the three major reporting agencies: Equifax, Experian or TransUnion to see your credit history. Know that each year you can get a free credit report, if you need more, than there is a small fee involved.

Used Car Loan

In case you have “spots” on your credit history, such as unsolved debts and other obligations that you did not assessed, make sure that you have them checked out. Keep in mind that some spots could be simple mistakes so analyze the credit report with great care because one of those mistakes can harm your credit score and considerably lower your chances to get good rates on a loan for a car. Having the necessary documentation will be enough to sort out any inaccuracies with the report agency.

Ok before you head to the bank or other loaning company, you need to get some documents that can prove you’re a homeowner and steady employment. A pay stub or a letter from your boss should be enough to cover that. Don’t forget to provide documents for your savings account.

Keep in mind that you’re not getting a new car, so don’t be surprised if your interest rate is a bit higher on your used car loan. Almost every bank or loaning company will charge 2% extra in annual interest for each used car loan. The age of the car greatly affects the amount of interest you will be charged. To put it simply: the older the car is, the more you will be charged in annual interest. Yet you need to know that there are VERY few banks that will provide a loan for a car that is 6 years or older. Because of their age and amount of use, banks don’t see these cars as enough collateral to cover the loan in case of payment problems.

Knowing that each bank or loaning company charges differently, it would be a good idea to visit more locations before making up your mind. Don’t go to the first place that comes to mind and get a loan because a little research does wonders and you will find another company with lower rates 90% of the time. Your best bet would be getting loans from company that work exclusively with car loans. For example the Capital One Auto Finance offers car loans to people that take buy their cars from dealerships. On the other hand Up2Drive will over loans when the individual decides to purchase used cars exclusively from private parties.

Now since you’re set all you need to do is to complete the loan application. You will have to provide some contact information and financial info such as income and SS number.

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