Buying a used car is a great way to find a reliable vehicle without paying sticker price for something brand new, but obtaining financing is something you should look into before you head to the dealership. Finding the vehicle you want is only half the battle, you still need to get financing for a loan to purchase it at a price that you can afford. There’s a lot to consider when you’re in the market for a used car but you can prepare yourself for the purchase by going over our six tips for obtaining financing for a used car.
1. Know your credit score.
You can’t be rejected for a car loan for having bad credit, but you might end up paying a higher interest rate. If your FICO score is over 700, you should be qualified for any low rates being advertised.
2. Get financing quotes in advance.
Not all companies or dealerships are equal. Look into what type of financing will be available to you before you go. You want to know how much you’ll be able to borrow, how long the term will be, and what interest rate you’ll be paying before you move forward with anything. You can look up car finance rates online, so you can be prepared well before you show up at the dealership.
3. Keep the term as short as possible.
The longer your loan term is, the more you’ll end up paying in interest over the life of the loan. Your monthly payments could be higher in a shorter-term loan, but by the time you pay off your car, it won’t be worth much anyway. Try to limit the amount of money you spend on interest and keep your loan term short.
4. Put as much cash down as you can afford.
Experts recommend putting down at least 20% of the purchase price when you buy a car. Obviously, the more money you pay upfront, the less you will need to take out in a loan. This decreases the amount of money you owe but it can also reduce your interest rate.
5. Pay fees in cash.
There are always a lot of fees associated with a purchase like this one. You’ll find that there are fees from the dealership, documentation fees, and sales tax to consider. You can fold these things into the balance of your loan but we would caution against it. You’ll end up paying interest on the sales tax too if you don’t pay it off right away. There’s no need to saddle yourself with the extra interest, just pay the fees in cash.
6. Timing is everything.
The market for cars, just like any other market, tends to fluctuate. If you can’t find financing that is satisfactory to you, then wait for a few months and check back. It’s always better to start looking before you absolutely need to make a purchase, that way you can wait out the market and take advantage of savings offered by dealerships in slower periods.
Once you’ve purchased your vehicle and if you don’t live close to the dealership, you can use a website like easycarshipping.com to get your new vehicle home so you can start driving it as soon as possible. Your personal financial health has a lot to do with how well-qualified you are for an affordable loan on your vehicle, but even without perfect credit, there is a lot you can do to improve the terms of your next car loan. If you take the time to compare different quotes, save cash to put down at least 20% of the purchase price, and pay attention to the timing of the market, you’ll be well on your way to owning your car outright
Buying a used car is a great way to find a reliable vehicle without paying sticker price for something brand new, but obtaining financing is something you should look into before you head to the dealership. Finding the vehicle you want is only half the battle, you still need to get financing for a loan to purchase it at a price that you can afford. There’s a lot to consider when you’re in the market for a used car but you can prepare yourself for the purchase by going over our six tips for obtaining financing for a used car.
1. Know your credit score.
You can’t be rejected for a car loan for having bad credit, but you might end up paying a higher interest rate. If your FICO score is over 700, you should be qualified for any low rates being advertised.
2. Get financing quotes in advance.
Not all companies or dealerships are equal. Look into what type of financing will be available to you before you go. You want to know how much you’ll be able to borrow, how long the term will be, and what interest rate you’ll be paying before you move forward with anything. You can look up car finance rates online, so you can be prepared well before you show up at the dealership.
3. Keep the term as short as possible.
The longer your loan term is, the more you’ll end up paying in interest over the life of the loan. Your monthly payments could be higher in a shorter-term loan, but by the time you pay off your car, it won’t be worth much anyway. Try to limit the amount of money you spend on interest and keep your loan term short.
4. Put as much cash down as you can afford.
Experts recommend putting down at least 20% of the purchase price when you buy a car. Obviously, the more money you pay upfront, the less you will need to take out in a loan. This decreases the amount of money you owe but it can also reduce your interest rate.
5. Pay fees in cash.
There are always a lot of fees associated with a purchase like this one. You’ll find that there are fees from the dealership, documentation fees, and sales tax to consider. You can fold these things into the balance of your loan but we would caution against it. You’ll end up paying interest on the sales tax too if you don’t pay it off right away. There’s no need to saddle yourself with the extra interest, just pay the fees in cash.
6. Timing is everything.
The market for cars, just like any other market, tends to fluctuate. If you can’t find financing that is satisfactory to you, then wait for a few months and check back. It’s always better to start looking before you absolutely need to make a purchase, that way you can wait out the market and take advantage of savings offered by dealerships in slower periods.
Once you’ve purchased your vehicle and if you don’t live close to the dealership, you can use a website like easycarshipping.com to get your new vehicle home so you can start driving it as soon as possible. Your personal financial health has a lot to do with how well-qualified you are for an affordable loan on your vehicle, but even without perfect credit, there is a lot you can do to improve the terms of your next car loan. If you take the time to compare different quotes, save cash to put down at least 20% of the purchase price, and pay attention to the timing of the market, you’ll be well on your way to owning your car outright.