5 Tips for Financing a Used Car

Buying a used car is a little bit different than buying a brand new one. For one, used cars are cheaper, and secondly, they have a shorter life expectancy than something that’s brand new. Those factors alone make it imperative that you are smart about how to pay for a used car.

Even though used cars aren’t as costly as new ones, they’re still a big investment. That means most people can’t just pay cash for one. Financing allows you to make affordable payments on your vehicle until you’ve paid in full. Continue reading to get some tips on financing your next used car.

Get A Cosigner

If you’re young and just getting started in life, then the chances are that you haven’t built up much credit. Bad credit and no credit are similar in the eyes of lenders. Having no credit means they have no indication of how good you are at paying off debts.

A way around not having any credit–or bad credit–is to get a cosigner. A cosigner is someone who agrees to pay your debt if you default on the loan. If someone close to you is willing to cosign for you, then you’ll be cruising down the road to building your credit. Just be sure to be diligent about making your payments for your sake and theirs.

Get Your Loan Before You Go To The Dealership

When you go grocery shopping, you don’t wait until you’re in the checkout line to figure out how to pay for your groceries. So why would you do that when you’re car shopping? Many car dealerships do their own financing or assist buyers in getting financing, but you should only borrow money on your own terms. 

If you have an account with a local bank or credit union, then that’s your best bet. The people where you bank know your financial history pretty intimately. They know your depositing, withdrawal, and spending habits, and they’re more likely to take a personal approach with you. On top of getting a lower interest rate, you’ll get the added comfort of getting a loan from a bank you have a relationship with.

Make Your Down Payment Count

The main benefit of financing a large purchase such as a car is that you get to spread your payments out over a few years. Even with that being the case, you still have to make a down payment on your vehicle on the day of the purchase. 

The best thing you can do to lower your monthly payments and interest rate is to make your down payment count. The higher your down payment is, the less you’ll have to borrow to finance your vehicle. 

If you don’t have much money saved up, then consider getting a payday loan online to cover it. Payday loans are short-term, and they usually do not show up on your TransUnion, Equifax, or Experian credit reports. In addition, payday loan companies don’t check your credit because your job and bank account are your credit in their eyes.

Buy Certified Pre-Owned

Some dealerships, like the Lynch Toyota dealership in Manchester, CT, sell certified pre-owned vehicles. These are late-model used vehicles that have been inspected and refurbished by the manufacturer and are in great condition. These cars also come with extended warranties. 

Financing a vehicle is a long-term commitment, so it’s important that your vehicle lasts beyond the term of your loan. If it doesn’t, then it wasn’t worth your investment. 

Certified pre-owned vehicles give you a level of assurance that your investment will be worth it. You’ll be getting a car that is still in its prime with plenty of life left, meaning it’s more likely to outlast your loan by years. And there are few things like the joy of having a car that’s fully paid for and running great.