Want to Buy a Used Car? Here Are Some Tips on How to Finance It
Tuesday, March 17, 2015, 6:00 AM | Leave Comment
You wish to purchase a used car, as the prices of new cars are impractical. Additionally, you lack the money to pay full purchase price outright. This is when the option of financing becomes practical.
It is important to first understand that buying any car is somewhat of a losing situation, as it will depreciate in value rapidly.
Regardless, there is often a need for a proper vehicle. Financing a used car is a good option because at least you are aiming for a car with a lower price.
As a result, financing costs will be ultimately minimised. There are some simple tips to follow in order to get the most pragmatic financing deal.
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Types of Financing
Often dealerships selling used vehicles will provide financing directly. Also you could choose to purchase from an individual and receive financing through a bank.
Even still, some dealerships selling used cars will not finance and you shall still have to finance with a bank whilst buying from the dealer.
For example, used cars for sale in Canberra financing can come from all three sources.
A fourth financing option is an online auto loan broker, and these can be accessed from anywhere.
Which of these options are the best for financing a used car? First, you must consider your credit.
If your credit is top notch, you will assuredly get good rates from most any source. You simply want to be sure that what you owe on the car is not too much more than it is worth. This is tricky even with outstanding credit.
It is especially good if you can put a down payment on the car. Typically, a minimum down payment of twenty percent is sufficient to keep your car payments manageable.
Should your credit be mid-range to poor, you are looking at greater interest rates across the board.
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Find the Best Financing Rates
Shop around for rates from different lenders before going to a dealership to buy a used car.
Next, find out what rates the dealerships will offer you. Go with the lender offering the lowest rates.
The dealerships are brokers for numerous lenders. You might find many rates to be similar as a result.
Regardless, it is worth the effort to shop around the finance market.
The next thing to consider is the importance of minimising the term of the loan. Here the logic is rather simple. The shorter the loan term, the lower the financing rate will be as the payments will actually be higher.
This is a solid option if you have the funds to afford it. Otherwise, you will have to settle for long term loans which provide lower payments with higher financing rates.
Financing a used car can be a bit of a game and a science simultaneously. Often, the dealerships aren’t going to tell you the best rates outright.
Use your research skills well and you will ultimately save money by spotting the better financing rates.
There is one final tip. To drop your overall loan payments, pay cash for taxes and fees associated with a used car purchase. This way such fees will not be included in the loan.
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