Whether you have a tight budget or you just want to save money on a new set of wheels, there are several reasons why you might opt to buy a used car instead of a new one. Whatever your reasons are, the fact is that you may still need financing. Financing used cars is often more difficult and more expensive than financing new cars, but by using the following tips, you can walk away with a used vehicle loan with fair rates and even better terms.
Because lending on a used car is inherently riskier for lenders than lending on a new car, the terms and rates on a used vehicle loan are generally short and high. The best way to get a loan that you’re satisfied with is to be prepared. Know what you can afford, know your credit score and have proof of income printed and ready to show. In fact, do the dealership one better and talk to your local credit union about financing. Because you already have a relationship with them, they may be more inclined to offer competitive terms and rates.
Fix Your Credit
If you need financing for a used vehicle, check your credit score before you head to the lot. If it’s less than 620 or even 650, take measures to repair it. Though it may take you a few months to do so, it will be well worth it when you can save thousands on interest.
Avoid Bad Credit Dealers
Sure, it may be easy to get a loan from a bad credit dealership, but only because they know that you’re desperate and are willing to pay an arm, a leg and quite possibly your first born for a used car. Buy Here/Pay Here lots generally charge higher-than-market interest rates and sell vehicles for significantly more than what they’re worth. Protect your wallet (and your dignity) and steer clear of these types of sellers.
Financing a used car is not impossible. Be prepared, fix your credit and shop wisely to find the best rates and terms possible.