There are many benefits of financing a used car versus a new car. However, there are also unique financing circumstances that apply to used car purchases. To make buying your next used car as simple as possible, apply online and get approved for a car loan before you begin shopping for a used car, mini-van, SUV, or truck. Applying online with us gives you instant access to several lenders at once, which saves you from having to search for the perfect lender on your own.
What To Do Before Shopping for a Used Car
There are several things that you should do before you begin shopping for a used car. First off, you need to look at your monthly income and your monthly bills to see what you can afford to pay for a new car. You may love that shiny used black truck at your local dealership, until you find out how much it’s going to cost you. Being realistic about what you can afford before you begin shopping can help you prevent financial problems in the future. Online, you can find several car payment calculators that can help you determine how much a future car note may be.
The next thing you need to do is take a look at your credit report. Most lenders will readily lend to borrowers who have a credit rating of at least 680. Remember, there are three national credit bureaus, and each bureau can assign you a different credit rating, so it is important to know all three ratings. Borrowers with a credit rating less than 680 may still be able to apply for a car loan, but will likely have higher interest rates and a bigger down payment required. Knowing whether you have good credit, or poor credit, is important in determining how big of a car loan you can afford to have.
Once you know what you can afford, apply online and get pre-approved. A pre-approval status does two things for you. It ensures that you stay within your pre-determined budget, and that you don’t get carried away while shopping. It also tells dealers that you are serious about buying a used car. Often times, when dealers realize you are ready to buy, they are more willing to make deals on great used cars.
Important Information to Consider When Financing a Used Car
Many lenders will allow borrowers to purchase used cars, but there are some financing guidelines that must be adhered to. Most lenders will not finance a used car that is more than a few years old, so keep that in mind when you are shopping for a used vehicle. Often the APR rate on a used car is about 2% higher than the APR of a new car. However, since the cost of a used car is often much less than a new car, you are probably still going to save money when you buy a used car versus a new car. Since lenders often view lending on a used car as being more risky than lending on a new car, borrowers often have to have a higher down payment than they would if they were purchasing a brand new car.