Best ways to get a car loan to buy a used car
After a long and hard search, you have found just the right vehicle you were looking for. It is the perfect size for your family, has the right engine size, looksis well maintained, and has the right enginethe engine that looks like it is still as powerful as new.
The catch? You do not have the cash to pay for it upfront or the perfect tool to buy cars online. Let us walk you through the different options available to you. However, first, find out the accurate valuation of your car through an online toolan online toolan online tool. It will make it easy to set your mind around a figure of the loan.
- Your bank
Conventional banks have been in car financing for a long time now and have started opening up to used car financing only recently. A word of caution here: while many conventional banks do offer used car financing, the interest rates are higher than new car loans.
This is because newer cars are safer, have more years in them, and speak for the owner’s purchasing power. The banks want to secure themselves against the risks of financing old cars, hence the comparatively higher interest rates.
The bank will want extensive details and documentation. Be prepared to submit copies of your driver’s license, national ID, credit reports and car documents. When approaching a bank for a used car loan, it is important to have a good credit score. Having a low credit score means you will get fewer load offers, and not verywith not very favorable terms on the loans you are offered.
In case you do not have a good credit score or you want to explore alternate options, here is another option.they are:
- Your credit union or community bank
In case your conventional bank choices are too expensive or your credit rating is not very good, you can talk to your credit union or community bank. Many small community banks and credit unions now offer used car loans as a means to facilitate their members. Since their clientele size is smaller, people have a better chance of having a personal rapport with other people at these organizations. This means the interest rates can be lower than conventional banks. an eEven in cases of low credit score, people who know you personally can trust you more and design a package for you. The best rates usually come from such small banks and credit unions, so it is always a good idea to get a quotation from one when exploring your options.
- Car dealerships
Many car dealerships now offer used car financing. A great reason behind car dealerships is the option to have a loan offer even when you have a poor credit score. Many people have a poor credit score but are willing to pay high-interest rates. Their best bet is to go through a car dealership financing option. Dozens of programs are available within this option. Some car dealers also help in facilitating a private party sales process if the buyer cannot get financing. Here is how it works: the car dealerships will buy the vehicle on paper, then they hand over the vehicle to the buyer and charge an extra fee. Dealer financing is a great idea for someone with a poor credit score to obtain an easy financing option. The great thing here is that the car dealership can handle the entire formalities of purchase as well as financing and you do not have to deal with separate entities and people to complete the process. Another major benefit is that while car dealerships offer their financing plans, many also offer to finance through other partners with whom they have mostly signed partnerships for favorable rates. So it puts you in a position where you can compare the different packages and rates you are being offered and decide what suits you best. Once you have received financing quotations from the dealership and their financing partners, it is always a good idea to take this quotation back to your credit union or conventional bank. You can the and ask them to beat the offer you already have. By Ddoing this smartly, you can pitch several quotations against each other other.and gGet your financers to sweeten the deal for you by lowering their rates and easing the payback times.
- Private Lenders
There are smaller, private money lenders who can finance your used car albeit on higher interest rates than probably all of the above options. Private lenders are more flexible with peoples a person’s poor credit ratings, so they are a good option in case the above options are offering no or unattractive options too. Since these lenders are taking on a huge risk, they hedge themselves against the riskthreat by charging higher interest rates. If you are on good terms with your financer, it might also be easier and faster to renegotiate the loan terms in the months ahead if necessary. Do keep in mind this is probably going to be the most expensive financing option out there.
- Your social circle
There is always the option to approach your friends and family for help. This option has some very important advantages, the most important one being that your car cannot be repossessed in case of nonpayment. The downside: you might have to hop around for a while to gather all the money you require.
Also, approaching friends and family for loans may get awkward in some instances. Moreover, Tthere is also thea possibility that your lenders may need the money back sooner than you think due to an emergent need at any time. This can be a last resort option to finance your used car,. but Also, there is no guarantee that you will be able to collect all the funds required and the terms might not be as concrete as your other options.
Unlike the past, there are now several ways to finance your used car. Whichever option you exercise, be sure to compare the quotations apples to apples. Then show the received quotes to other financers and ask them to offer you a better deal. Evaluate all your options; think about the amount of risk you are willing to take, and how much premium you are willing to pay for your car. Putting some effort into this process is sure to land you a cheaper and more attractive deal.
Audrey Throne is a mother of a 3-year old and a professional blogger by choice. Throne is passionate about lifestyle, business, automotive, technology and management and blogs frequently on these topics.
Find her on Twitter: @audrey_throne.