Finance a Used Car

How to Finance a Used Car?

Auto owners love the smell of a new car. But those who buy used are willing to forego the distinct aroma in exchange for a lower purchase price on a vehicle. If you choose this route, pay close attention to your financing. Otherwise, the money you saved buying used could speed right out the window.

Used car buyers like to save money. They research their product, kicking tires until their toes hurt. Yet a common mistake among them is to overlook car loans as a critical part of their search for value. Unless you're careful how you finance, you could lose just as much money as you've saved negotiating a purchase price. Here are a few helpful tips to consider as you embark on your search.

Understand how the game is played
Financing plays a key role in motivating the seller. If you're buying through a dealer, be aware that many used car salesman make their money on the "back end" of the deal. This means that they'll be willing to take a small profit off the price of the car in the hopes that they can make money on the financing end of the deal. Before you agree to any financing packaging, compare the specifics of each dealer's offer with the rest of the market.

When you buy through a private party, the seller wants to choose the buyer who'll close the transaction soonest. If you're pre-qualified for a loan before you enter into the negotiating process, you're at an advantage. If you're in competition with another buyer, you may be able to tip the odds in your favor.

Research your financing up-front
Before you even start researching used cars, take care of the financing. Begin by reviewing your credit score. Lenders consider your score when determining your interest rate and repayment terms. If your credit report has errors that are lowering your score, it could negatively influence the quality of your loan. You'll want this cleared up before you begin shopping for lenders.

After your credit report is in tip-top shape, start shopping for finance options. Search the Internet, visit with local lenders, and ask your friends for referrals. Compare lenders' rates, repayment plans, and overall customer service. When you've chosen a good lender, get pre-qualified for a loan. It will give you added leverage with private buyers, and provide you with a comparison when you consider a lender's program.

People buying a used car can't resist the urge to start kicking tires. But it's the wise shopper who kicks a few lending institutions first. Get your financing ducks in a row before you start shopping. It's the best way to ensure that you retain the value that comes from buying a used car.

Car Loan Tips