Knowing Your Options for Financing a Used Vehicle

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If you’re in the market for buying a new car, but don’t want to spend the money to buy a brand new make or model, buying a used vehicle is your best option.  Although you may not have the cash to buy a used vehicle upfront, a lot of used car dealerships offer financing options.

Before you get started, it’s important that you know your credit score so you can find the best possible loan.  This will give youa good idea of what kind of loan and term options you will have available. In the United States, you are entitled to one free credit report a year.

Here are some options for Financing a Used Vehicle:

Direct Loan

If you have a credit score of 680 or higher, you will be considered a desirable candidate for a direct loan and should receive the best rates.  A higher credit score equals lower interest rates. If you have had a checking or savings account with the same bank for a number of years, check with them about getting a direct loan.  Because of your history as an existing customer, you may be eligible for a better loan.

It’s also recommended that you get rate quotes from multiple lenders so you can compare rates. This will ensure you get the lowest rates and have checked every option.  

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Offer a Sizable Downpayment

The more money you can offer upfront on the purchase of your vehicle, the lower your payments and rates will be. This will also prevent you paying more in interest than the vehicle is actually worth.

This may seem like a no-brainer, but a lot of used car dealerships don’t require their customers to put any down any money upfront, regardless of their credit score.  

Pay for the “Extras” in Cash

It can be tempting to bundle all the miscellaneous expenses into your car payment, such as sales tax, registration fees, documentation fees, and any other extras that you choose to include such as extended warranties.  

Often, your dealership is willing to roll all these fees into your financing. Unfortunately, that ensures that you will be upside down on your loan, since you are increasing the amount of your loan, but not the value of the car which secured the loan.

Get approved today!

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