When you buy a preowned vehicle, you are able to get a good deal and have a great car. Even with preowned vehicles, you can get a car loan instead of having to pay cash upfront. Before you attempt to apply for auto financing, there are some things you should know first. Here are some tips to follow before you get your used car loan.
Know Your Credit Rating
When you apply for a used car loan, one of the first things the lender looks at is your credit score. This is important because it reflects how responsible you are at paying your bills and keeping up with your debt. If you have a low score and a lot of items in collections, it shows a history of not being able to pay bills on time. To a lender, this makes you high-risk and they might deny your loan. If you find information on your credit report that is inaccurate, try to get it resolved before applying for the loan. With those items off the report, your credit rating should improve. If you have bad credit, you might need to pay a higher interest rate for the loan or get a co-signer.
Offer to Leave a Large Down Payment
Whether you have bad credit or not, leaving a substantial down payment is recommended when getting a loan. This can help if you have poor credit and still want to get a loan, as many lenders will give you the loan with the right amount of down payment. A big down payment is used toward the cost of the loan, so it often helps reduce the monthly payment amount and interest rate as well. Overall, the down payment is going to increase the chances of being approved for the loan.
Buy it at the Right Time
If you want to save as much money as possible, buy the car and get the loan at the right time. First of all, track interest rates for car loans and apply for a loan when you notice a momentary dip in interest rates. If you see the interest rate drop to a rate that is the lowest in the last several months, it is usually a good indication that now is the perfect time to get the loan. Also look at local dealerships during certain times of the year when they tend to have specials. Dealerships will have 0% down specials during holidays and other special days throughout the year.
Get Financing From the Dealer
If you could not get a loan from a lender or your own credit union, consider financing from the used car dealer themselves. They tend to be more lenient with the loans they give out, especially if you give them a large down payment and agree to a higher interest rate.