Many people love that new car smell, but recently, more and more people are willing to do without it in order to save money. A used car can be a terrific option for many people, but you have to know how to get the best deal on a used car, since financing one can be somewhat tricky. If you don’t pay close attention to your financing options, you may find that the money you saved by buying used isn’t nearly as much as you think.
One of the best things you can do before you go shopping for a used car is to get pre-approved on financing. To get started, compare rates at several different lenders, car lots, and other institutions. Be sure to find out what term lengths, interest rates, down payments, and other criteria apply to the loans. Once you’ve identified for a few loans that work for your budget, apply for them. Even if you’re approved, you don’t necessarily have to use the money – but it does make it a lot easier to go car shopping when you know how much you can afford to spend.
One of the best ways to get financing for a used car is through your bank. Many banks, credit unions, and other financial lending institutions offer terrific rates on new and used car loans to their members. Currently, if you can qualify for one of these loans, you’re likely to see interest rates as low as five percent – and sometimes, a bank or a car loan lender in Sweden such as Billån 24 will offer rates even lower than that. It’s best to speak with your bank’s loan officer to see what options you have in terms of loans, interest rates, and terms.
Most dealers make money on the back end of the car sale through loan financing, as well as on the actual sale of the car. In fact, they’ll often take less of a profit on the price of the car in order to make more money on the financing end. However, before you say yes to any financing offer, make sure you do your research. Check to see what other dealers are offering and whether or not you can find a better rate. Go back to dealers that are close in terms of what they’re offering and see if you can get them to lower the price of the car or financing in order to close the deal. Car salesmen are terrific at putting a positive spin on just about anything involving a car purchase – make sure you can see through the cloud of smoke to the bottom line.
Avoid Buy Here, Pay Here
For people with less than stellar credit scores, the lure of a “buy here, pay here” lot can be strong. Many of these car lots state that they sell cars on payments with no interest on the loan. However, there is interest – it’s simply added to the cost of the used car. Many of these companies will sell used vehicles at outrageous weekly payments simply because they know people need cars. However, the first time you’re a day late on your payment, your car can be repossessed.
If you aren’t able to qualify for auto financing on your own, try to clean up your credit score as best you can. You may be surprised at how many banks and other lenders offer second chance financing for those that have had credit problems in the past.