Most of the problems that occur when people are searching to finance for used car are related to the importance of the paperwork. Many of us think that paperwork should be completed as soon as possible so that we can drive with our cars right away. You shouldn’t rush into any decisions when financing a used car as there is a significant amount of money that you must take into consideration and there is no room for mistakes.
To begin with, it is crucial to get the deal agreed upon by the car salesman to be put in writing in the contract. In other words, the contract must feature the monthly payments which are based on the interest rate. Speaking of the interest rate, it is a common practice among dealerships to inflate it so that they can make a nice extra profit. If you want to avoid this and I’m sure you do, you’ll have to get independent vehicle financing before heading out to the dealership. By doing so, you can proceed as a “cash buyer” and the only thing that you will be negotiating is the price of the vehicle. Needless to say, car salesman always have preferred their customers to have monthly payments because in this way it is easier for them to hide some of the costs of the car.
Finance for used car can be obtained from a bank, on-line lender or credit union. The most common issues car buyers have to face when trying to finance a vehicle are:
a) They don’t know their credit rating – for this reason, you should order a copy of your credit report and correct any discrepancies that you notice. The credit bureau will specify how you can fix these errors when they send you the report;
b) They have the tendency to overspend once they reach the car dealership – which is why you should write down a price range for the vehicle and stick to it at all times. According to finance experts, the car payments along with the related expenses should not consist of more than 20% of your monthly net income;
c) Many car buyers head to the dealerships without doing a little bit of research regarding the current interest rates and as a consequence, they don’t know if the rate they’re offered is competitive or not – for this reason, you should use the Internet to compare rates and get a clearer image of what you should be looking for from the dealer;
d) Lots of car buyers go to the dealership without getting the appropriate auto financing which means that they won’t have any negotiation powers when discussing with the dealership about the interest rates – which is why you should get a no-obligation loan before heading out to the car dealership;
e) In some situations, the clients are confused or pressured by the staff of the car dealership and although they have second thoughts, they still sign the deal – which is why you should do your homework ahead of time so that you will know what to expect from the dealer.
As you can see, there are a lot of issues that must be taken into consideration before purchasing a used car. Taking into consideration that usually we are talking about a lot of money, you’d better do your homework in order to grab a good deal that won’t ruin your wallet.