Your Used Car Finance Choices
There are options open to you if you want to buy a used car. Maybe you have relatives that are able to lend you the money, or you may be able to borrow on your credit card if the vehicle is relatively cheap. However usually when looking for used car finance, you have to consider other options and two of these are hire purchase and personal loans.
· When buying your vehicle privately you have two basic options, you can look for a loan yourself, which may take some time, or you can choose to go to a specialist motoring website and let them search on your behalf. Some websites allow you to browse through used cars online so you may be able to find not only the best deal on finance but also a great used vehicle too.
· If you have savings that you are able to put towards the car, you may have to borrow less. This may work out to your advantage, as there is less interest to pay on the borrowing. This means you save money of course, you may choose to pay something towards the cost of the vehicle if you are taking a loan, it just means you borrow less and with hire purchase, a deposit is usually a requirement.
· If you decide to choose the hire purchase option when looking for used car finance then you may want to take into account that you do not own the vehicle until the final installment has been made on the loan. This means you cannot sell the vehicle or trade it in until this time. However if you have chosen to take out a personal loan, providing you keep up your repayments on the borrowing you are free to do whatever you want with the vehicle.
· You are able to spread out the cost of car finance whether you decide to choose a personal loan or you choose hire purchase. The longer amount of time you take the loan out over, then typically the cheaper the regular repayments may be. However the downside is that you will pay more in interest.
· The cheapest rates of interest are sometimes offered to those individuals whose credit rating is perfect. Your credit score is taken into account by all lenders whatever type of loan you decide to choose. You might therefore want check your credit file before applying for any type of finance to buy a vehicle so that you are able to see what the lender sees. You can contact any one of the three main credit reference agencies – CallCredit, Experian or Equifax.
These of course are just some of the many things you may want to take into consideration when looking for used car finance. You may want to spend some time online researching loans and your options before rushing into taking on a loan of any type.
Louis Rix is a Director of NetCars, one of the UK’s leading motoring websites. First established in January 2000, its mission is to become the number one site for used car searches. NetCars provide Used Car Finance.
Used Car Financing FAQ:
Question: Used Car Financing ?
I will be a first time car buyer. I would like to purchase a 2007 Cadillac for $20,500 after the dp and taxes. My question is what will the terms likely look like for first time car buyers? I have about 2 years of revolving accounts and that’s it! I have a 650 f(A)ko. Is it possible to finance @ 5% for 60 months or is this pushing it? If not what will my offers look like?
Answer: Expect more like 10% or more. To get around 5% you need a score of over 700 or higher. Talk to your bank and get some firm figures. You may find you will have to spend less on a car in order to afford the payments.
Question: How long is the longest you can finance a used car in texas?
I have really bad credit and the last car I bought not to long ago I had to pay 21% interest.
Answer: With bad credit, I doubt you could get anyone to finance you for over 48 months. Many will only go 24-36.
Question: Car Buying Advise, financing or paying cash?
What is your advise regarding car buying. I want to spend 20k on a used car. I do have the cash in hand. Should I finance (and use my cash money for something else) or buy it cash? My only Concern at this point is the insurance cost associated with financing a car.
Answer: If you have the cash, you can save the cost of financing and interest. However, if you have more productive uses for the money or need it in case of emergencies, you might want to consider financing.
Your concern about insurance with financing is interesting. You mean you would buy less insurance than a bank or loan company would require of you? Their insurance requirements are no higher than the level of insurance any intelligent person should have anyway. If the bank would want to protect their financial interest in a car, why wouldn’t you want to protect your own if you pay cash? Without insurance, paying for a new car after your old car is totaled is very expensive.
Question: Is it possible to finance a used car from a dealer with no money down?
Can they put the taxes and other fees into the cost of the car?
Answer: Depends on the dealer and your credit. The worse the credit, the higher the interest rate.
If you are in a situation where you can get an inexpensive used car and pay cash, I would do so. Then you can save until you can pay cash for an upgrade.
Yes, they can put the taxes and other fees into the loan if the total loan is less than or equal to the cars value.
For example, if you get a car valued at $5000 and the dealer sells it to you for $4000 then you have $1000 leeway that will cover taxes and other fees if the dealer will do it.
Question: How likely is it for a person with a 630 credit rating to finance a used car with a trade & no money down?
I am looking to trade in my 2000 Jetta, good condition, 118K miles. Not sure how likely this would be but I work out in the field and need a gas efficient vehicle.
Answer: Really hard to say looking at the current economic situation. Do you have any delinquent accounts on your credit report? 2 years ago it wouldn’t have been an issue, but now it may be. The only way to know for sure is to go to a dealership. Then they will have different banks “fight” over your loan, assuming you get approved.
Question: Can I finance a USED car with SSD as my only income?
I live in NYC and I NEED a car. I don’t want a car but NEED one for my sons occasional emergency issues and to get around the city since trains/buses are hard for him. My credit after I got ill went downward to my current score of 563 because of my inability to pay off my student loan since I could not work or anything but that debt has been discharged. I rent a home and rely only on mine and my sons SSD income that reaches a total of $1,380 a month altogether. The car I’m looking for doesn’t have to be a top of the line vehicle. I’m looking for any sedan/minivan from years 1990-1999. I was wondering if it would be at all possible to finance a car from a dealer?
Answer: Sorry – it is highly unlikely that you will be able to finance a car with that credit score and that income. Car finance agencies will want to see you have a steady source of income, and something that can be garnished if you stop paying, which SSD cannot. Insurance alone will eat up 1/4 of your income in the city. I don’t think you can reasonably afford this on your income.
You may want to look into the Zip Car program, where you pay for hourly use of a car that includes everything (parking, gas, insurance), or the disability transit options on the MTA.
Otherwise, pretend you have a car, and put $400 a month into a savings account (which is about what you will spend on a payment, insurance, tags, parking and gas) for the next year. If you do that, not only will you know you can afford a car, but you will have almost $5,000 for a down payment, which will increase your ability to get a loan.
Question: How new does a car have to be to finance?
I want to buy a used car for around $6000 with a $2000 down payment. So the year of the car will likely be 1997-2003 and I was wondering if a bank will still finance a car that is that old. Is there a set year?
Answer: There’s no set year. It depends more on your credit score and credit record, and the value of the car vs. the amount of loan.
One thing to consider – find out how much the car will depreciate over the next few years, and compare that to the balance of the loan you want to get. You want to avoid a situation where the car depreciates faster than the balance of the loan, or you’ll end up owing more for the car than it’s worth. If you can’t make the payments, and you have to sell it, you won’t be able to get out from under the loan, and you’ll be screwed.
Also – remember that as long as you have a loan on it, you’ll probably have to carry full coverage for the insurance. Factor that cost into the cost of ownership, and call your insurance agent for quotes on cars before you commit to buying any vehicle.
Question: Trying to finance a car, but I’ve got a question?
I’m interested in financing a used car. The car I want is from a used car dealership around 200 miles from my current residence. Will they finance me even though I live so far from them? Does it usually matter?
Answer: Your location should not matter. I would suggest you go ahead and talk to a local bank about getting pre approved for a loan. That way you will get a better rate and don’t have to worry about the loan when you are at the dealership.