If you’re in the market for a used car, it’s a good idea to know some of the ins and outs of getting a used car loan. While it’s not necessarily a difficult thing to do, it’s still a good idea to learn some basics before heading out to finance your used vehicle.
What Used Car Lenders Consider
When used car lenders are considering whether to issue you a loan – and how much to charge for your interest rate – there are a number of factors that they look at, such as:
- Your Credit – First and foremost, a lender is going to look at your credit to determine whether you should qualify for a loan. If you’re score is too low, or your report shows multiple blemishes, the lender may feel that you’re too much of a risk and either won’t extend you a loan or will charge you a high interest rate.
- The Vehicle’s Age and Price– Did you know that many lenders will not finance a used car that is more than 5 years old unless it is truly inexpensive? Because of the possible problems that can ensue with a used car, lenders often don’t want to extend a loan. It’s good to keep this in mind as you search lots for used cars.
Use Caution When Working with a Dealer
It’s quite customary to stop by a used car lot and then speak with a dealer about financing. But some dealers only work with certain finance companies to provide loans – and they’re not always favorable to you. So don’t be shy about shopping around with different dealers, or looking to your own financing when you find a car you like to avoid paying more than necessary.
Online Banks Offer Cheaper Rates
If you’re looking for the best rates for used cars, it’s great idea to look to online financial institutions. They’re not held to the same rates as national banks, and don’t have the same overhead, which means they very often offer lower rates than traditional banks. It’s good to know that used cars come with higher interest rates than new cars; however, if you work with an online institution, the rate will likely not be as shocking.
If you find that you’ve purchased a used car at a rate that you’re not happy with, it’s good to know that many financial institutions are keen on refinancing loans. If you keep these ideas in mind, you should find great success in securing a used car loan.