| Used cars outsell new cars by a significant margin. When you consider that a new car loses 60-70 percent of its value in the first two years it is easy to understand the financial wisdom in the purchase. Need a used auto loan for your dream wheels? Here is what you should know before you apply.
Used Car Loans Are Available from a Variety of Sources
Extend your used auto finance search beyond the dealer. Who else should you research?
- Banks – particularly the institution that has any of your current accounts.
- Credit Unions – even if you are not a member you may be able to join if you have an eligible family member (the pay off: credit unions generally offer the most competitive used auto loan rates)
- Internet based financial institutions.
Know Your Position Before Completing the Used Auto Finance Application
Familiarize yourself with your credit report and score before you apply for a used car auto loan. This information can give you an idea of the used auto loan rates available to borrowers in your score range. The best rates are available to borrowers with the highest scores. Credit scores below 620 are generally considered poor. Use this information to make sense of the numbers that lenders throw out at you. If you have no sense of the kind of used car loan rate you can expect it will be difficult to negotiate or even know if you are being presented with reasonable figures. You can also plug information about used auto loan rates, car costs, down payment, etc. into a used car loan calculator to make the most budget friendly purchase.
You May Qualify for a Used Car Auto Loan Even if You Have Bad Credit
Have you been turned down for a used auto loan? You may still be able to get your car. Options are available if you know where to look and what to look for.
- Where should you look? To a financial institution that is willing to make sub-prime loans.
- Like other used car loans, a bad credit used car loan, a type of sub-prime loan is available from banks, Internet lenders, credit unions and auto dealers. But, there is a catch: used auto loan rates are often significantly higher in the sub-prime market.
- Compare lenders before you apply because used car loan rates vary widely.
- Ask about APR (annual percentage rate amounts), total anticipated used car loan payments and your total cost for the used car loan.
- If the loan is too costly it may be wise to wait until your credit improves.
Avoid impulse buys. Take the time to compare lenders, rates and used cars for the best deal. You may even want to wait 24 hours from the time you take the test drive before making a final decision. It is the dealer’s job to pressure you. Have all of your facts, figures and limits firmly in place before you shop.
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