It costs a lot of money to buy a new car. That is why used cars are incredibly popular with consumers. However, many people still need used car financing. While auto financiers may be willing to offer 100% financing for new car purchases, they usually ask for a downpayment to finance used cars. The terms and conditions they offer on used car loans are also much more different since the value of these vehicles can only be approximated. Read on to learn more about used car financing.
Where to Get a Used Car Loan
The car financing business is quite profitable. That is why there are many financiers in the industry. They range from car dealerships, banks, credit unions and private lenders. Since the terms and conditions these financiers offer differ greatly, you should take your time to find a lender who has the best terms. This includes; a zero or low downpayment requirement, flexible terms, low interest rates and minimal restrictions on the type of used car you can buy. It is important to note that there are lenders who cannot finance cars which are over 8 years old. Other lenders require additional collateral to finance old cars. The good news is that there are lenders who only look at the applicant’s credit history and income level to approve car loans. In fact, they are always willing to offer 100% used car financing and negotiate the interest rate if the applicant has a high credit score and a significant income.
What You Should Keep in Mind
A car loan is a type of secured credit facility which uses the vehicle to be financed as collateral for the loan. If you want to buy a used car, all you need to do is find a car which meets your requirements and get a proforma invoice or quote from the seller. The financier will require you to attach the invoice to your application as the basis for the level of financing you’re seeking. If the application is approved, the lender will write a check to the seller after which you can drive the car home. You will be required to make monthly payments to the financier every month to offset the car loan. If you miss several payments, the financier will repossess the vehicle and sell it to recover the outstanding balance of the car loan. Consequently, you will be reported to credit reporting bureaus. For this reason, you should apply for a car loan you can afford and service the loan according to the terms and conditions negotiated with the financier.
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