Even though you are thinking of buying a used car, you may need to borrow some money. Although used cars are cheaper than new ones, it does not mean that you will have already enough money. Financing a used car is the same as financing a new car.
However, before financing a used car, you should ensure that the deal you choose suits your budget. There are various types of lenders, including banks, credit unions, and auto dealers who can fund your used car.
When you are thinking to buy a secondhand car, make sure you are not buying a very old model. This is because the car is a depreciating asset. You may end up getting the most expensive deal. Here is how you can get a used car loan deal.
Shop around
First off, you should shop around so you can get the best deal. Whether you are financing from a car dealer or a lender, you should shop around first. The deal likely seems good and attractive to you, but you could be missing out on other better and more attractive deals.
When you are financing a car, your aim is not to have a car. In fact, it should be getting it at the most affordable deal that does not cost you more than the value of your car.
When it comes to financing a used car, you are to carefully choose a deal because the value of the car is already depreciated. This is why comparison shopping is recommended.
The first thing you need to do before shopping around is checking your credit score. Even if you have a poor credit score, you can get a loan.
However, you can qualify for a better car loan deal if you have a good credit score. It is always advisable that you should improve your credit score before applying for it.
Avoid making multiple queries
If you submit multiple applications, it will affect your credit score. Each application will require a lender to make search prints on your credit report, and your credit score will go down.
Each inquiry will show up separately on your credit file. It may take at least a two week period to get back to you, so try to be patient. Do not be impetuous.
Arrange a bigger down payment
If you arrange a large deposit, you will need to borrow less money. The lower the loan amount, the lower you will pay on interest.
If you are planning to finance a used car, you can easily arrange a bigger deposit size because they will be cheaper than new cars.
A rule of thumb says that you should see the market value of such cars and see how much you can set aside as a down payment.
Understand that some cars depreciate quickly
You all know that you can secure a good deal if you have a good credit rating and you arrange a larger deposit, but there is one thing that you often ignore while financing a used car.
You should understand the fact that some cars depreciate too quickly, especially luxurious cars. Some people buy a luxurious secondhand car because, at the market price of an ordinary car, they can buy a used luxury car.
These cars depreciate quickly because they cost you more money. If you buy a car that quickly depreciates, you will not be able to secure a good deal at all. This is because you will end up paying a lot more than the salvage value of your car at the time when the loan expires.
Term of the loan
The term of the car is usually a period of three years. If you are buying a used car, make sure that the term is shorter.
If you are buying a secondhand car using your parents’ funds and some savings, you can consider car finance for unemployed in Ireland, but keep the term shorter. Otherwise, you will end up paying more than the value of your car.
Getting a used car loan deal is no longer complicated if you bear the tips mentioned above in your mind.