Getting Used Car Loans

Buying a used vehicle is a good way to save money, but you should make sure the car you buy will last. Before you apply for auto financing, ask the seller to make a complete checkup. The vehicle should be in good working order before you looking into different loans. Generally, this is more of an issue if you want to buy a used vehicle from another person than from an auto dealership. It is important to inspect and test drive the car before buying it. You may also have a mechanic (independent third party) to check the vehicle for potential problems.

The next step is to visit a local credit union or bank and see what your options are. Your credit score will play a more important role with some financial institutions while interest rates vary from one lender to another. If your credit score is 680 or higher, your credit union or bank may be the best option. You can also get financing for a used car by applying through the manufacturer’s finance arm. This is possible provided that you are financing a car that is under 5 years old, which is certified by the manufacturer. You should definitely investigate this option because manufacturers often offer attractive interest rates. Applying for an auto loan from a dealership is a third option. Dealerships usually maintain relationships with a number of financial institutions and offer financing to a variety of customers. If you choose this option, make sure you are done negotiating the price of the vehicle and then discuss loan used

Then, if you are buying the vehicle from another person, you may consider getting a person to person loan. This arrangement will allow you to repay the financial institution in monthly installments after paying for the vehicle. It is a good idea to get an extended warranty on the vehicle but make sure you shop around to find the best price on the warranty. Some dealerships charge high fees for this. Another option is special insurance that covers the difference between your loan amount and the value of the vehicle. Getting this type of insurance is beneficial. It will help you repay your debt in case something happens to the car.

Before you sign the papers, there are some questions to ask your lender. For example, how long does the financing process normally take? Do they require a set amount for the down payment and what do you have to put down? If you are applying for auto financing from a car dealership, ask them about the trade-in value of the vehicle. Inquire about the interest rate and the best rate they offer. Will your interest rate change? Do you have to pay points (and how many) to secure a lower interest rate? In addition, ask about the total charges you will end up paying over the term of the loan. You may want to ask the lender whether there are any fees and what fees are included. Inquire about the monthly payments on your auto financing and ask for how long you will be paying them. Are you allowed to lock in on the quoted points or rates? Locking in means that the financial institution will keep your points and interest rate firm over a certain period of time. Finally, ask whether the lender can require a full repayment and for what reasons. You should also ask about the options for early repayment and whether there are early repayment penalties.