If you’re looking to buy a used car on loan, you will find that getting a loan for a pre-owned vehicle isn’t as easy as getting one for a new car. If you’re having trouble getting a used car loan in place, here are some tips that could help.
Know Your Credit Score
Before you walk into the dealership, ensure you check your credit score. Keep in mind that getting a car loan isn’t like getting a home loan – you can finance a car even if you don’t have great credit. The only issue is that you may have to pay a higher-than-average interest rate since low rates are reserved for people with good credit scores. What this means is that you may have to shell out significantly more money over the course of the loan term if you have a poor credit score. So, make sure to check your credit score before you visit the dealership.
Don’t settle for the first loan offer you get. Make sure to approach online lenders, traditional banks, and credit unions for used car loans. Compare the loan offers you receive and then approach the dealership for a loan. Since you already have a loan offer from a financial institution in hand, you may be able to negotiate with the dealership for a better rate.
Keep Your Loan Term Short
Opting for a long loan term will lower your monthly payments, but you’ll end up paying a lot more interest over the course of the loan term. Instead, what you should do is opt for the shortest loan term you can afford.
Make a Large Down Payment
One of the best tips we have for anyone purchasing a car is to make a large down payment – at least 20% of the vehicle’s total price, but more if at all possible. The more you pay for the down payment, the lower your initial loan amount will be, which will not only decrease your monthly payments but may even impact your interest rate positively.
Get a Co-Signer
If you don’t have a long enough credit history, get a co-signer with a good credit score for your car loan. This will have a positive effect on the rate of your loan and bring down the monthly cost.