Shop Lenders
When financing a pre-owned vehicle, you have a number of different lender options. You can negotiate a loan directly with a dealership or with a credit union or traditional bank. The ease of obtaining a loan from a dealership may be enticing, but you will likely pay higher interest rates in exchange. A bank or credit union is likely to provide you with more favorable rates and terms than a dealership. One option is to negotiate the best possible terms with a bank or credit union and then present them to a dealership to see if they will match them.
Browse Loans Rapidly
Don't linger as you navigate the loan-shopping process. This process should be completed within one to two weeks at most. The reason for the rapid shopping is that your credit score takes a small hit each time you apply for financing. These soft hits are minimal and do not remain on your credit report for an extended period of time, but they can have an effect. Depending on how many inquiries hit your report, the impact could be greater. Keeping the duration brief will lessen the overall impact on your credit score.
Examine Current Rates
Interest rates will have a substantial impact on the overall viability of financing used cars. Lenders determine interest rates based on the credit scores of borrowers, so the higher your score, the lower your interest rate should be. Your credit score is based on your payment history, your current debt level, and the length of your credit history.
Loan Term
The term of a loan has a significant effect on the total cost of used cars. A longer-term loan will require the borrower to pay a greater amount of interest over the life of the financing. If you have the option between a shorter and a longer term, the longer term will likely have lower monthly payments. This may be enticing for your monthly budget, but keep in mind that you will pay more overall for this longer period. Reducing the term of the loan will result in higher monthly payments, but you will pay less interest to the lender.
Check Lenders
Before making a final decision, investigate a company's reputation thoroughly. The federal and state governments regulate lenders to ensure their compliance with the law. Call your state's attorney general's office to inquire about a particular business. Additionally, the Better Business Bureau has information on businesses that can help you determine whether a company is reputable.
Shopping for financing can be as difficult as shopping for used automobiles, but the time spent is well-spent to ensure a fair deal."""
