3 Strategies for Financing a Used Car

November 16, 2018 5:35 pm

You’re in the process of buying a used car. Have you considered the different options you have? The best deal you’ll get is to purchase the used car by paying everything upfront. This saves you on costs down the road. Car dealerships will always give you the most favorable deal this way because they’re not taking on any risk in a loan. Yet buying a car outright isn’t possible for most. Now the solution you need is financing a used car.

1. Shop Around for Loans

You can get your financing from a bank, credit union, or the car dealership itself. This is really the best strategy you have when financing a used car: shopping around.

Part of the process of buying a used car is looking around for the best deal on what you want. You should take the same approach for your auto loan. Some loans will give you more favorable terms than others. They may offer great flexibility, lower monthly payments, lower interest rates, the list goes on. Fill out a few different applications to know the details of every option you have.

2. Good Credit Means a Favorable Loan

How’s your credit history? If your credit score is good, you’ll have a better chance at a loan with favorable terms. Lenders look at this, but it’s not the only factor. They’ll also consider how much you make, how much you have saved, even investments you have or property you own.

This information all contributes to painting a financial picture that allows them to feel safe giving you a loan. Your credit history is also your history of paying back previous loans and debt, so a good score lets them know you’ve done this faithfully before.

3. Special Financing Can Help if You Have Bad Credit

What if your credit history isn’t good? This is where we get to special financing. Now, special financing for an auto loan doesn’t mean that you’ve done anything wrong. People have bad credit for a range of reasons, most of which aren’t their fault. Lenders also know that a car may be crucial in keeping your job or getting one, and making money.

You can still get a loan this way, but the interest is higher because the lender is taking more of a risk. If you can pay back this loan according to its terms, however, this can be one way of improving your credit score.

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