Who wouldn’t want to cut the cost of a vehicle by procuring a favorite brand at a much cheaper price? Therefore, many would consider this option and have a used car without financing it. Used car financing comes in two forms, from private lenders such as banks, SACCOs or the car dealer himself.
The two options of financing reliable used cars are not always an easy choice to settle and run with, they attract several considerations which a buyer has to make at the end of the day. And with various used car dealership around you, the choice isn’t always straightforward. However, below are few tips and steps on how you can secure a reliable used cars financing.
1. Go for a Direct Loan
Before applying for a financing scheme. It is important to have all your credit report and credit score in place, these are what lenders use to determine your loan request, and the interest rate thereafter. Different credit scores will prompt different response from lenders and with a credit score of about 680 and above qualifying you for a loan. The higher your credit score, the best negotiating power you have on low-interest rates.
2.Contact credit unions and banks
By contacting potential financiers like banks and credit unions, you are able to gather as much information as possible on the best loan deal out there. Get to know their terms and interest rates of reliable used cars. Many lenders issue a 5-year loan duration, and this is dependant on the age of the pre-owned cars you are looking to buy. Used Vehicles above 5-years attract for a 1 to 2 years financing. Mileage is another contributing factor on loans for used vehicles. Most often, banks and credit unions will impose particular mileage restrictions, normally 100,000 miles. And no lender will finance a recovered titled vehicles.
3.Enquire rate quotes from different lenders.
Before agreeing to a loan from any lender, enquire their interest rates offered on reliable used cars. More often, lenders will offer a 4 to 6 percent interest rates on used vehicles.
4. Ask for a pre-qualification letter
This letter will have contained the best rate from a lender, and it outlines the term and conditions of the loan. Carry this letter with you to a pre-owned car dealership and in return, you’ll need to provide the lender with all the information regarding the vehicle you choose. Feed the lender with the car’s make, VIN number, and the model. If the lender is satisfied will the details you’ve just provided. he or she will process the loan and you can walk tall to the dealer for your car.
5. Get a dealer loan
This is the another financing option you can secure financing the purchase of a car. You’ll first need to apply for financing then see to it the process of securing your car. Dealers interest rates unlike lenders interest rates on loan are higher. If you are a bit cautious, you should probably stick to a direct loan.
The good thing about dealers financing, it’s that they’ll finance any of their used car, something you won’t find from lenders loan.
6. Research on competitive interest rates
It is very imperative you do a comparison analysis on your credit score basing it with interest that you deserve.
Lastly, if you care comfortable enough to offer a down payment, you should do it. Vehicles are depreciating assets in general and offering a down payment will increase your chances of securing a loan for your preferred used car.
