Get Used Car Financing Now!
Information
About Used Car Financing
When buying a used car, you
have two choices: pay in
full or finance over time.
If you finance, the total
cost of the car increases,
since there will be interest
and other loan costs. You'll
also have to consider how
much you can put down, your
monthly payment, the length
of the loan, and the annual
percentage rate (APR). Take
the estimated car payment
and multiply it by the
length of the loan. Add to
this, the amount of your
down payment. This is the
amount of the car you can
afford before interest, tax
and fees. It is important to
stay within your price
range, and take into
consideration other expenses
such as fuel, insurance, and
maintenance costs. Always
shop around, compare offers,
and negotiate the best deal
you can. Be cautious about
advertisements offering
financing to first-time
buyers or people with bad
credit, there is always a
catch. There are two ways to
finance, through the dealer
and through an outside
source, such as a bank
Dealer
Financing
There
are some
certain
pluses
about
financing
a used
car
through
a dealer
–
Convenience,
multiple
financing
relationships,
and
special
programs
(such as
manufacturer-sponsored,
low-rate
programs).
Most
dealerships
have a
Finance
and
Insurance
(F&I)
Department.
The F&I
Department
manager
will ask
you to
complete
a credit
application.
The
dealership
will
obtain a
copy of
your
credit
report.
In
exchange
for this
service,
the
dealer
will
charge
you more
for your
auto
loan.
How much
more
depends
on your
credit.
Based on
your
credit
score,
an auto
loan
will be
arranged
through
the
dealership's
lending
institution.
Most
auto
loans
are from
three to
five
years,
yet
different
lengths
of time
can be
arranged,
if
desired.
The
bigger
down
payment
you can
make the
better.
The
dealership
may
retain
the
contract,
but
usually
sells it
to an
assignee
(such as
a bank,
finance
company
or
credit
union).
These
finance
companies
will
usually
evaluate
your
credit
application.
It bases
its
evaluation
upon
what
appears
on the
individual's
credit
report
and
score,
the
completed
credit
application,
and the
terms of
the
sale,
such as
the
amount
of the
down
payment.
While
you are
paying
off the
balance
you owe
on your
car, the
lending
institution
will
hold the
car's
title.
Once all
the
payments
are
made,
the
car's
title is
sent to
you and
you
finally
own the
car.
Make
sure you
ask your
dealer
if the
model
you are
interested
in has
any
special
financing
offers
or
rebates.
Generally,
these
discounted
rates
are not
negotiable,
may be
limited
by a
consumer's
credit
history,
and are
available
only for
certain
models.
You can
also
negotiate
the
annual
percentage
rate
(APR)
and the
terms
for
payment
with the
dealership.
Direct
Lending
In some
cases,
used car
buyers
prefer
"direct
lending:"
they
obtain a
loan
directly
from a
finance
company,
bank or
credit
union.
The
benefit
with
doing
this is
the
finance
arrangements
will be
done
before
you even
enter
the
dealership,
and it
may give
an upper
hand in
negotiating.
In
direct
lending,
a buyer
agrees
to pay
the
amount
financed,
plus an
agreed-upon
finance
charge,
over a
period
of time.
Using
this
method
makes
buying a
used car
simple -
all you
need to
do is
negotiate
the
price of
the car
and then
write
the
dealer a
check
for this
amount.
This
process
also
begins
with
filling
out a
credit
application.
If
approved,
you will
be given
a credit
limit
and
issued a
check (a
draft or
bank
draft)
that can
be made
out to a
dealership.
The
lending
institution
will
hold the
car's
title
while
you make
all the
agreed-upon
payments.
When the
balance
is paid
off, you
will get
the
car's
title.
Financing
Mistakes
Make
sure you
don't
make
these
mistakes:
-
Most
consumers
don’t
research
the
current
interest
rates
being
offered
in the
marketplace,
so they
have no
idea if
they're
being
offered
a
competitive
rate.
-
Many
used car
buyers
don't
know
what
their
credit
rating
is when
they
apply
for an
auto
loan.
It's
important
to make
sure
your
credit
report
is in
the best
shape
possible
before
shopping
for a
car and
the only
way to
do this
is to
know
what it
is.
-
Many
consumers
don't
review
the
contract
thoroughly
before
signing.
As a
result,
they may
agree to
buy
things
they
didn't
plan on.
Before
you sign
any
papers
or hand
over any
money,
understand
all the
charges.
-
The
consumer
feels
rushed,
pressured
and
confused
by the
deal
that is
being
made to
buy the
used
car. But
they
sign
anyway.
Never do
this, if
it is
not
comfortable
walk out
and come
back
later.
Some are
tempted
to
overspend
on a
used
car.
Always
set a
sensible
price
range
for the
used car
you want
and
stick
with it.
-
The Financial
Manager
may try
to
confuse
you by
"intertwining"
different
elements
of your
deal.
Don’t
let
them,
treat
the
car-buying
process
as three
separate
negotiations
—
vehicle
price,
financing
and
trade-in
value.
Credit
Issues?
If your
credit
just is
not good
enough,
a co-signer
may be
allowed
to sign
in order
to make
up for
any
deficiencies
in your
credit
history.
A
co-signer
assumes
equal
responsibility
for the
contract,
so you
should
exercise
caution
if asked
to
co-sign
for
someone
else.
Financing
a car is
a
process;
if this
is
followed
getting
a used
car
should
not be
to hard.
Know how
much can
spend on
a used
car, how
long the
loan
should
be for
(often
between
30 and
48
months),
and
search
for the
right
vehicle.
Try very
hard to
stay
within
your
price
range of
the used
car, and
don’t
forget
about
extra
expenses,
fuel,
maintenance,
and
insurance
costs.