When you go shopping for a new car, it isn’t necessary that you will always go for the newest one. Sometimes, in order to save some money while still getting a decent car, you’d have to get a second-hand car. Here are the top ways to finance a used or second-hand car.
With the pandemic still going on, people are finding it harder and harder to travel in public transportations and thus, they are looking for private cars. While it might not be too good for the environment, it is a good solution for the people who buy it.
If you look it up, you will find a lot of used cars for sale. But have you thought about how you will be able to afford it? There’s a car loan for used cars too, and not necessarily for brand new cars only.
In a survey, it was found that 55% of people take out loans to buy their cars, and hence, you can be sure that a huge chunk of those people also get used cars. So, how exactly do you finance buying a used car? Here are some of the tips and tricks:
Have you been a loyal customer with a good credit score?
This is perhaps the most important step in the process. First and foremost, even before thinking about a car, you must think if you can afford it. You will only be able to get a loan if you have a good credit score in the lenders’ book. It’s basically a measurement of how up-to-date and frequent you have been with your payments and clearing outstanding dues.
If you have been active, then you must have a high credit score and if you do, you shouldn’t have issues getting an auto loan. But if your history says otherwise, then be sure to experience a harsh time trying to get a new loan.
Which lender to choose from?
Even if your credit score is decent and you are ready to get a loan, you must first know where to borrow the money from. There may be good loan offers, but always remember that nothing is free. You might want to look for lenders outside of the dealership, and already strike a deal with them.
Research around you and find what best suits your needs – a lender who is ready to approve your loan with acceptable interest rates. You can take loans from – national banks, credit unions, community banks, online banks, finance companies.
Applying for a used car loan
Now finally when you have decided where to get your money from, it is time to meet them and apply for that glorious loan. But it will not be a smooth task, since you would have to tick a lot of checkboxes for them.
Be aware that they will take a deep dive into your credit history, the money you owe, the salary you earn and analyze whether you would actually be able to repay the loan. Also, they might ask for personal information and build a complete profile of you. If they feel like you are someone who can repay the loan with the interest, then you will get your approval.
Now, which car to get?
Now, you might be wondering, after all that hassle, which car to buy? Obviously, not all cars will cost you the same amount of green and hence, you need to come to a decision. First and foremost, you must be pretty sure what segment of car you want -a crossover, a big family SUV, a sports sedan, a hatchback, or a pick-up.
Be sure about what type of car you and your family want. Now once, you’ve decided, research that car and look for the best and most tempting offers around you. Used cars can not have a hard and fast rule for pricing, so you must be seeing pretty flexible prices. Choose a car that best fulfills your needs within your budget.
Thoroughly research the car you want
Now that you have decided on the exact car you want and the exact model year, be sure to check the car in person. Talk to the person in charge about the condition of the car, about the mileage on the car and how it has been spec-ed up. Now not every car will have the same miles on the dashboard.
Two same exact cars with differences in the number of miles driven will have different conditions. Research the car beforehand, know about the reliability, know about what a good price for it is. Be sure to check the condition of the car before striking the deal, or else you might have to spend more on repairing it.
Read the fine print
Now, not every organization is your friend and thinks about your well-being. There must be a few deals that would seem too good to be true at first. You must be tempted by it and jump the gun. You must be very observant. Always read the fine print. Have they sneaked in any undesirable conditions?
Are they actually asking for more than what they show on the surface? These conditions must be made clear before striking the loan deal. Don’t fall for too long of a time period. While the monthly payment might be low, you will have to keep dragging it on for years and it might harm your ability to purchase something else in the future with an outstanding loan. So, always pay extra attention and be smart.
Be a good citizen and pay your loans!
The last thing you’d want is the party coming to get you because you couldn’t pay your monthly installments.
Be a good citizen and make sure to pay your loans on time. Remember that they also depend on you and your word. If you don’t pay on time, it will hurt your credit score and will hamper your ability to purchase a new loan in the future; not to mention the consequences you will have to face.
Also, always try to get the right insurance as auto loans can be tricky. Lenders will ask you to carry a collision and comprehensive insurance, which ensures that they will get paid even if the car is stolen or damaged. There will be quite a legal mumbo-jumbo, so be sure to be clear and concise with everything.
What if you can’t pay your installment on time?
If there has been an emergency and you cannot pay the loan on time, go and talk to the lender about the situation and provide a solid reason. If they are kind enough, they might be able to delay the payment or refinance you into a loan.
Also, if you think you won’t be able to pay at all, then you must take your car and voluntarily surrender it to your lender. This way, you can minimize the repossession cost. This might ease up the amount you would actually have to pay back.