Need to Finance a Used Car? Follow This Advice

Vehicle reviews and ratings

Used cars are becoming a more popular choice for many people, especially since most used cars these days offer many of the same features as newer ones. One of the main reasons a person chooses to buy a used car over a new car is that they simply don’t have the money to pay for an expensive new car. Since saving money is often the goal, used car financing isn’t ideal because the owner could end up paying high vehicle financing rates. However, sometimes a person who really needs a vehicle doesn’t have enough money to pay for the car all at once. When looking to finance a used vehicle, there are typically two car finance options: going through a direct lender or getting one through the dealer.

Direct Loan

When looking for a direct loan from a lender, it is always a good idea to first get a copy of your credit report. Your credit score is used by lenders to determine your ability to pay back the loan, and if the number isn’t great, you could be denied. Generally speaking, a credit score of 680 or higher puts you in a very good place with lenders and can help you get the best used vehicle financing rates. After you know your credit score, you can call up banks and other lenders to inquire about their loan polices on used vehicles. You’ll want to know what their requirements are before looking for a car, as it could influence where you go and what type of car you buy. Many lenders will only provide used vehicle financing for cars that are from a dealer franchise and are five years old or less. Once you have a few rate quotes from different lenders you can compare them and choose the best one.

Dealer Loan

Another option, though not always the best option, is to get a loan from local used car dealers. The rates from dealerships are typically higher than those from a direct lender, however dealerships usually have fewer financing stipulations than direct lenders and will typically finance all of their used cars. Many dealers will charge a higher interest rate than they should in hopes of earning a little extra cash from the deal, so it is important to do your research before agreeing to anything. Knowing your credit score, you can research average interests rates so you have a good idea of what is a reasonable rate.

While used vehicle financing is not necessarily an ideal choice, it can sometimes be the only option for someone on a tight budget. Knowing your options and how to go about securing a used car loan can help ensure you get the best deal. More information like this:

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