If you’re like many Americans, you realize that buying and owning a car is a necessity. That said, buying a new car at premium market prices isn’t a necessity. You can often find something of equal or greater quality by looking to your local used car dealerships.
Even buying used cars can be costly, especially if you get stuck with a bad deal when trying to finance used cars. As the well known financial news website BankRate.com points out, the current interest rate for financing a used car is 4.86%, and that’s if you’re going to pay your car off in the relatively short period of 36 months. If you have to take any longer, you’re going to pay a lot more. Whatever your financial situation, these simple tips can help you smartly finance used cars, protecting your wallet now and in the future.
Three Smart Tips and Tricks for Financing Pre Owned Cars
- Find Financing Before Heading to Your Local Car Dealerships
- Don’t Lock in on One Car
- Make a Serious Down Payment
If you have a good credit rating, the best way to save when trying to finance used cars is by getting pre-approved for financing with your local lender. It’s no secret that car dealers bump up the cost of financing in order to improve their profit. Having said that, if you have bad credit, the only way you’re likely to be financed is by getting help from your dealership.
According to a recent story from AARP, keeping your options open can be one of the best ways of keeping your financing rates low. It all comes down to negotiating power. If you put more options on the table for whomever is going to be backing your purchase, you make it that much more likely that at least one of those cars will get the green light for financing. Just be sure to select each of your potential vehicles carefully to avoid getting trapped with something you don’t actually want.
For Money Before 30, a popular online resource for living on a budget, cutting your financing rates is all about making a significant down payment. At the very least, you should be putting 20% down at the time of purchase. Making a large down payment has a number of significant advantages, from shortening your repayment period to reducing the principal on which you’ll accrue interest. The more you can put down from the get-go, the less money you’ll have to shell out over the life of the loan.
If you’re a used car dealer, what are some of the tips you give customers on saving on their financing? Share your tips in the comments below. Ger more information on this topic here.