When it comes time to buy a new car, many people are opting
to buy used instead. Many used cars are available on the
market today which have very low mileage, and are actually just
a year or two old. These used cars often look and run like new,
but the price is drastically different than buying a brand new car.
It's for this reason that many people look into getting used car
loans instead of going with new cars only.
Financing used cars is sometimes a bit more difficult than
financing a new car, but there are many options available for
getting used car loans, so we'll review some of those here.
Car Dealer Used Car Loans - Car dealers will often finance
your loan for you, or appear to, but in reality they're simply
arranging the financing for you. And they're charging a hefty fee
for this service too. When a car dealership arranges financing
for your used car loan, they're usually increasing the
percentage rate for a profit of their own. Let's say for instance,
that they get you approved for a car loan through the
manufacturer's lending program at 6% interest. They won't tell
you about the 6% interest, instead they'll tack on an extra
2%-3% of their own, and tell you you've qualified for 8%-9%
interest instead. This is one of the most expensive ways to
finance a used car loan.
Tote The Note Used Car Loans - There are many used car lots
which will tote the note for you. In other words, they actually
provide the financing for your used car. These types of used car
lots can do this because they require a large down payment,
they sell cars which are a bit old, damaged somehow, or have
high mileage on the engine already. Then they also charge
hefty interest rates too.
There are other ways to get a used car loan though. Not every
option will work for everyone, because which loans you can get
will depend a bit on your credit rating and score. If you don't
have good enough credit to get a used car loan, you might have
existing collateral that can be used instead.
Bank loans - If your credit is good enough, you can sometimes
get a regular bank loan for your used car loan. Banks are
particular about what they lend money for though, so you may
not be able to get a used car loan from a bank if the car is too
old, or priced too high. If the car is fairly new though, and in line
with the blue book value, you might be able to get a used car
loan through your local bank.
Credit Union Loans - Many credit unions are now teaming up
with car dealerships to offer used car loans to customers.
Often the credit unions have great interest rates, and you pay a
small finders fee for the loan instead of having extra interest
points added.
Home Equity - If you have a home that you've been paying on for
awhile, you may have some equity built up. If so, you can often
take out a home equity loan to use as a used car loan.
|
|
|