Thursday, 1 August 2013

Financing Your Next Used Car

Purchasing a used car can be daunting for some, and be exciting for others. In today's economy especially, the market for pre-owned cars has never been more popular since customers are not necessarily looking for large new cars and expensive payments that stretch 60+ months long. The market for these cars offered affordable values, excellent deals, and an almost endless supply of cars. However, several steps are essential to make sure that you get the best possible deal when financing your next used car.

The first thing you should do when looking for a cheap car for sale is to request a copy of your credit report. By doing so, you can examine your credit report for any inaccuracies and make sure that you get the best possible financing options at the dealership. Often times, low credit scores can result in very high interest rates, whereas those with perfect credit or above average credit scores can qualify for lower interest rates and financing specials.
Next, be sure that you contact your local bank or credit union prior to going to the dealership. By contacting your local credit union or bank, you can arrange for financing ahead of time, and lock in a rate or length of loan. Ideally, you won't want to go more than 60 months in your loan term. Banks and credit unions will limit the loan terms on higher mileage units and do so for older units as well. Additionally, purchasing the used car via a dealership will give you better financing options versus an independent car lot from a banks perspective as well.

Once you have your approval, be sure to compare the different approvals before signing the contract for the loan. Banks and credit unions offer different rates, programs, and terms, and each of these should be compared and reviewed. A difference in 1% can often make a large difference in the payment amount, and especially when the payment is made over a 60-month term.

With you may able find a fine dealership for your own. By bring the dealership a pre-qualification letter; you can speed up the process of getting the loan at the dealership for the car for sale. The dealership will know that you were already pre-qualified, and they won't have to shop your loan application to various lenders in hopes of an approval. They can go directly to your bank or credit union for the approval and lessen the approval time from their side as well. Lastly, be sure you give your bank or credit union the finalized car information. Your bank or credit union will want to know the car make and model, VIN number, and other factors.
If you aren't able to get a loan through your bank, you will be getting one via a dealership. They will send your loan application to various lenders and get the rate from them. They will often increase the loan rate in order to make a profit, so knowing your credit score and info will lessen the rate for your approval. By providing a down payment or trade, you can lessen the loan amount and bring the payments down on your car purchase.