Friday, July 6, 2012

How To Finance Used Cars Affordably

Buying used cars can be a very good idea. After all, if you want to save money and buy a vehicle that has what you want in it, this is the route to go. The cost savings on a relatively new but previously owned vehicle is outstanding. It is often too good to pass up. The problem you may have, though, is getting the right loan for it. Many lenders are happy to finances these vehicles but to do so, you have to buy the right thing. You also have to keep your costs in mind during this process.

What's the Value?

The biggest factor when buying used cars and finding a loan to do so with is ensuring the value is present. If you purchased a vehicle from a person selling it in their front yard, you are going to have a harder time getting a loan. That's because the lender needs to be sure the value of the car (the amount it is worth) is at least as much as the amount that you are paying for it. Otherwise, the lender is adding more risk to the loan. You may need an appraisal or a representative to look at it and determine its value.

Buying from a dealership reduces this risk. This is especially true of a well-respected and larger facility. They are more likely to be trusted has having a quality car. The lender does not want to end up having a borrower with a vehicle that does not work in a year and have four more years on a loan to pay on.

Be Wise

You still have to do some shopping around to find the right lender, too. You need to make sure that the vehicle you are buying is the best possible option around. Then, you need to find lenders who offer low interest rates and good terms. You will want to ask about any dealer incentives that may be available. Keep in mind that some companies do offer warranties on these vehicles. That's something to work into the purchase price.

What are the loan terms? Have you talked to various lenders including credit unions you belong to, banks and national auto lenders? Do you have a down payment to reduce the interest charges? Take the time to compare all of your options before making a purchase.

When you do this, two things happen. First, you get a vehicle that is worth the money you are paying for it and fills your needs. Second, the loan is one that's affordable. That makes this purchase a very good one and a solid financial investment into your future, too.

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