There are more than double the amount of used car sales made each year than new car sales.
There are many reasons why a lot of people prefer to buy used rather than new, one being the different financing options available. Financing a used car is generally attainable for a wider range of people than that of a new car.
Since there are so many ways to go about it, we’ve compiled the best used car financing tips to help get you started!
1. Be Prepared Before Beginning
The most important thing that you can do in order to get the best outcome in a car purchase is to be prepared.
Unfortunately, buying a car isn’t like going grocery shopping. Most people don’t just get to go to the dealership, pick whatever car they want, and then leave with it. Likely, the purchaser will need some financing in order to get the car.
Before you head to the dealership to look at cars it’s helpful to know what kind of financing you are eligible for.
One way you can know what’s available to you is to check your credit score. Lenders will look at your credit score to determine how big of a risk it is to loan money to you. The better your score, the lower risk you are, the more they will lend to you.
When you go into the dealership armed with knowledge about your situation, you can make more informed decisions and get the best deal.
2. Look Into Working With the Dealership
A little known secret is that you don’t have to work with a bank to finance a car purchase. While many do that, there are also buy here, pay here dealerships that will finance your purchase in house.
This type of dealership will process all of your application information themselves instead of a third party. The financing department will likely ask you to verify income, allow a credit check, proof of address, and more of the typical information required for getting a loan.
The benefit of working with the dealership directly is that they often will work with those customers who have less than ideal credit.
Because they don’t have the same standards as a bank or credit union, they can usually give out loans to those customers who wouldn’t be able to get one traditionally. They will work with the customer to find a car in the price range available.
Working with the dealership for used car financing can speed the process up quite a bit for the customer, which is always welcomed.
3. Stay Within the Set Budget
It can be very easy to get carried away while car shopping. The options available may have you wishing for a car that you can’t actually afford.
Understanding your limits and budget before beginning your search (and also keeping it in mind throughout) will help you to enjoy the car much longer. Many customers end up financing a pre-owned vehicle that is out of their budget and it causes many problems.
Many lenders or dealerships will offer calculators where you can input some of your information and find out what loan total you can afford.
This gives you to set parameters to keep your search within. Being able to afford all of your payments on a regular basis is much more enjoyable than having to stress each month.
Knowing your budget can give you more confidence when you do choose a car.
4. Factor in Insurance Costs
Car insurance is required by law and most lenders will want to see proof of insurance before finalizing the loan. But many customers forget to factor in those costs to their budget.
One of the benefits of purchasing a used car is the insurance rates available to you.
Because insurance rates are often based on the overall value of the car, they are typically lower for used cars. This doesn’t mean that the car isn’t worth anything. Brand new cars are valued high and then depreciate quickly after purchase.
So a used car, even if it’s a great car with low mileage that’s been taken care of, will be valued less than a new car.
Insurance costs can add up quickly so it’s important to factor them into your overall budget. It would be terrible to think you’ve stayed within your budget until you get your first monthly bill and realize insurance has pushed you over the edge.
5. Take Advantage of Options
The best thing about purchasing a used car is all of the options available to you.
Used vehicle sales are skyrocketing and taking over the industry. The number of used cars sold every year is much higher than that of their new counterparts.
This also means that there are more used cars on the market for purchase. Most customers are able to be a bit more specific in their search for a used car because the options are so wide.
They can pass-up a car that isn’t their color or interior preference because odds are high that there is one with their preference on the market somewhere else. This is a huge benefit to the customer as they can get exactly what they’re looking for instead of settling.
When you know exactly what you are looking for let the dealership know so they can help you find the right vehicle.
Get Started Financing a Used Car
Purchasing a car, whether new or used, is an exciting adventure. The steps to financing a used car purchase shouldn’t take away from that excitement.
Instead, follow our tips to used car financing and get on the road quickly! If you’re more prepared and know what to expect going in, the process will be much less intimidating. You’ll be able to find the car that fits your needs, wants, and budget.
If you’re ready to get started, contact us today to see our inventory and learn more about our financing options.