How to Get a Used Car Loan

In a day and age where credit reigns supreme, it’s not extremely difficult to get a good used car loan rate. However, you don’t want to make the mistakes others have made in the past by simply walking up to the first dealership or bank you run across then ask for a car loan. In this scenario, you are likely to pay entirely too much for your loan when there were greater deals all around you.

So you may be wondering then how you can get a used car loan – and one that works well with your wallet. Here are a few tips to consider:

1. Don’t Start and Stop with Dealership Loans

When you’re searching for a used car, very often you will stop by a dealership to find the vehicle and financing. While this can make the process easier or more convenient, you may be able find a better deal on a similar car with a private party and also find a better auto loan rate by financing through a bank.

2. Try an Online Bank Rate

If you’re looking to get a used car loan, one great way to do so is through an online bank because they often offer cheaper rates than brick-and-mortar banks. First, you visit a website for a bank you like, then follow their directions to apply for their loan (you usually have to provide the car’s VIN, your SSN, and a few other personal details). Next, submit your application and you can usually receive an approval or denial within minutes.

If you’re approved, you will receive a check from the bank for the amount of the car purchase, then you can take it to the dealership, purchase the vehicle in full, and pay the amount the vehicle costs (plus interest) back to the bank in monthly payments.

3. Don’t Shy Away from a Credit Union

If you belong to a credit union, you might want to consider taking out an auto loan with them. Many credit unions offer cheaper rates than traditional banks if they’re not federally mandated.

It’s good to keep in mind that your credit plays a large role in your being approved for a used car loan. So check out your credit report and score (and make repairs if necessary) to increase your chances of being approved for an auto loan rate you can handle.