Instead of buying a new car, purchasing a used car instead can save you tons of money while offering similar benefits as buying new. Buying a used car is especially helpful if you have a family and/or on a tight budget. If durability is a concern for you, rest assured cars of today last a lot longer due to major improvements and advancements in the auto industry compared to the vehicles made in the 50’s and earlier. If you need to purchase a used car but lack the funds necessary to buy one with cash, there are financing options available to give you the ability to walk out the door with the car you’ve got your heart set on. To finance a used car, one of the options you have include obtaining direct financing. Keep reading below to find out more about the process of getting loans for your car directly today.
If saving money is priority, the best thing to do when buying a used car is to be prepared for it. Loan processes for used and new cars are typically similar, besides cost. Funding on used cars are riskier for lenders, so interest rates are usually higher and terms are shorter. This is a good time to calculate a realistic price range of how much you can afford on your used car before reaching out to potential lenders.
Where your credit score currently stands will give you a good idea of potential rates and terms for financing. You are able to acquire one free copy of your credit report a year in the United States, and have free access to your credit score from free online sources such as Credit Karma. Credit scores are determined by factors such as your current debt, your bill history and whether or not you pay your bills on time. Make sure your credit report is accurate, free of errors that may affect your score. Credit scores of 680 points and up are considered ideal and allows for better rates. The higher your score, the lower the rates you can negotiate with finance companies.
If you have been a loyal customer with an active checking and savings account with a bank for a long period of time, start there when searching for loans. Your good history with the bank will provide leverage and may get you better rates. Consult with other local banks as well to compare loan rates. Credit unions may also be a good source of financing, usually enforcing fewer restrictions and offering more forgiving terms than banks do. You will find that most banks will not offer direct car loans for a vehicle purchased from an independent dealership or private owners. However, you can still try to take out a personal loan instead.
If your credit score falls below the ideal 650 points to qualify as a prime borrower, you can still get approved for a direct loan as a subprime borrower through online lenders willing to finance people with average credit. Online lenders tend to have less overhead, allowing room to charge lower rates than lenders with store fronts. However, these loans usually come with more restrictions due to borrowing with a lower credit score.
It’s always a good idea to shop around to get the best rates to finance your used car. Check out all the rates available to you before you choose your loan plan. Having the numbers in front of you allows you opportunity to negotiate better rates as well from your preferred lender.
Once you have considered your options and narrowed down the lender you’d like to get financing from, you will then fill out a loan application (many have option to be filed online). You will need basic identification information, including your driver’s license and social security. Your loan agreement will specify the requirements your used car must meet in order to acquire financing.
If you are receiving financing from sources outside the dealership you are buying your used car from, you will be saving the dealership costs. This will be a great point to bring up during the negotiation process if there is a discount available for saving the dealership money. Make sure you have your used car inspected as well as go through its car history. Consider all of its past owners, and how many accidents it has been through (if any). Ideally, the less owners and accidents, the better condition the car typically is in.
Depending on your lender policy, you may receive a check for the exact amount of your used vehicle or sometimes a blank check worth up to the maximum amount approved by your lender. You must maintain the minimum coverage insurance (details can be found in your loan agreement) when you use direct financing to buy your car.
Hopefully, following the steps above has offered you guidance to help obtain financing for your used car at the lowest rates possible and lets you walk out that dealership door with the keys to your desired car. The key to securing good loan rates for your vehicle is to be prepared. Conduct the research, shop around, and it definitely wouldn’t hurt to sharpen up your negotiating skills. This alone can help you save a lot more money in the overall cost of buying your used car. Don’t forget to stop by R&B Auto Center for the best selection of used cars in Fontana to suit your needs! Happy hunting.