Things You Need to Know about Used Car Financing
- December 8, 2019
- Car Loans, Used Cars
- Posted by The Auto Warehouse
- Comments Off on Things You Need to Know about Used Car Financing
Have you finally found the used car you’ve always wanted to buy but you don’t have adequate funds for the purchase? Used car financing is a great option to consider. By financing your purchase of a used car, you’ll be able to afford the cost of a used car without having to shell out money for the entire price all in one shot. Payments will be spread out over several months, depending on your terms. However, it’s important to note that financing the purchase of a used car will accrue interest, which will increase the total price of the car. If you’re looking into financing a used car, here are some of the most important things to consider.
One of the things you can expect when financing a used car is monthly car payments. It’s imperative that you’re able to allocate a budget for these payments in addition to the other monthly expenditures you already have. Ideally, there should be enough room for this in your monthly budget and, and your payments shouldn’t exceed one-third of your daily income. Also, make sure you’re aware of the following expenses when financing a used car:
- Down payment: Opting to finance the purchase of a used car may allow you to pay the cost of the vehicle on a monthly installment basis, but you’ll still need to contribute some amount of down payment. The bigger the down payment, the smaller the amount you’ll need to borrow. This is especially important when your credit score is less than stellar. So, if you’re considering purchasing a car with used car financing, be sure to save up for your down payment as early as possible.
- Interest rate: Like any other types of loans, a used car loan comes with an interest rate. The internet rate is the cost of borrowing money for the purchase. You may encounter offers for zero interest but be cautious as these may not actually be the best deal. Try to look for offers that have interest with rebates. Take the time to do some computations so you can accurately compare prices.
- Loan term: The loan term may vary depending on what the dealerships offer, but it can stretch anywhere from five to eight years. If you want to make sure you’re not paying more than the vehicle’s actual cost, try to stick to a five-year loan term or shorter.
- Other charges and fees: In addition to down payment and interest rates, a used car dealership may ask for additional fees and charges on top of the total cost of the car. Some lenders charge fees for originating and closing the loan, while others charge penalties for paying off the loan early. Again, it varies per lender so be sure to ask about these things when you go shopping for used cars.
Choosing the right lender for your financing
When it comes to financing a used car, you can choose from credit unions, banks, or “buy here pay here” dealerships. While banks and credit unions offer competitive rates, going for a “buy here pay here” dealer can also benefit you in other ways. In addition to the convenience of having all of your paperwork taken care of for you on-site, there’s a good chance that you’ll be able to drive your dream car home on the same day when you choose a “buy here pay here” dealer.
In a “buy here pay here” dealer like The Auto Warehouse, loans are processed in-house. We can help you realize your dream of owning an excellent quality used car, regardless of any financial difficulties you may be experiencing. We make sure to provide our customers with reliable second-hand transportation, no matter your credit standing.
Deciding on the terms of the loan
After choosing a dealer for financing a second-hand car, the next step is deciding on the terms of the loan. This is the part where you will have to decide how much money to pay towards the down payment as well as the length of the loan. Ideally, the down payment should be at least 20 percent of the total cost of the car. This will help keep the interest rates reasonably low.
Have you been wanting to drive your dream car home? Used car financing is an excellent option. If you’re looking for the best dealer to help make that dream come true, The Auto Warehouse is your best bet. Please feel free to give us a call from more information.