Your Biggest Used Car Financing Challenges Solved
Used Car Financing
If your credit isn’t in the best of shape, you may figure you won’t be able to get financing the used car you have your heart set on.
Whether you ‘re just starting out and don’t have a credit history, or if you’ve made some mistakes in the past and your credit rating is less than stellar, you still can get a loan for a car.
Read below for some tips.
- First, understand that the worse your credit rating, the higher your interest rate will (Which means you’ll end up paying for more the car over the life of your loan than someone with better credit.)
- Still, Edmunds.com reported that in the third quarter of 2014, 32 percent of those who took out used-car loans had either subprime credit (credit scores between 501 and 600) and even deep subprime credit (scores of below 500).
- Know what you can afford in your monthly payments and do not go over that amount. Understand that you will be tempted Understand that the financing officer may figure out a way that you can ‘afford” a different monthly loan amount. Ignore that temptation: stick with your budget.
- Understand also that car loans for new cars tend to have lower interest rates than those for used cars. New cars cost more than used cars, so you’ll probably still have lower monthly payments by buying a used car, even if the interest rate is lower for a new car.
- If at all possible, see if you can save a good chunk of change for a down payment. This, coupled with any trade in value you may be able to get with the car you currently have also could help you end up paying less monthly because the amount of your loan will be less.
- Visit your own bank or credit union first to see if you can get a loan: you have a much better chance of getting a loan with a smaller interest rate with them. If the bank says no, check out your credit card company. If you’ve been with a credit card company for a while, you may be able to get a loan there.
- If not, head to the used car dealer. In fact, many used car dealerships have great experience with subprime borrowers and could help you make our way through the loan process, even helping you secure a loan at a lower rate than you think possible.
- Don’t be shop around. In other words, don’t jump at the first loan offered you; you just may be able to find a better deal elsewhere.
- As time goes on and if your financial situation should worsen to the point that you can’t make the car payment agreed upon, contact your lender If you’ve been diligent in making payments – and have no late payments – the lender may be willing to work something out with you, such as smaller payments over the remaining length of your loan (note; you’ll pay even more interest overall), or lower payments over a set time (still, you’ll end up paying more for the car overall).
PAACO offers financing for buyers of our used vehicles. In fact, we don’t have salespeople, we have finance specialists.
If you’re in the market for a used car and need financing, visit a PAACO location near you and check out our inspected and warrantied used cars.
Give us a call at 877-810-4555.
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