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February 25 2009
2:00 pm
Car Loan Rates
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Used Car Auto Loan - Tips on Financing Your Used Car

Tip! The medium-term cost of a car lease is about the same as the cost of buying, assuming the buyer sells/trades their vehicle at the end of the car loan. The overall cost of a car lease compared to a car loan, over the same lease/loan term, is approximately the same, more or less, assuming the buyer sells the vehicle at the end of the car loan.

Used cars are not as easy to finance as new cars. Lenders are more hesitant of financing vehicles with unknown pasts. However, you can find reasonable rates on auto loans by lining up your financing before you go car shopping. A down payment of 10% or more, plus shopping with a car dealer can also improve your rates.

bGet Financing First, Then Car Shop/b

Pre-approved auto loans have a number of advantages. First, you find out what you qualify to borrow before you get stuck in a contract. You can also play around with loan terms to find a reasonable monthly payment. And sellers are eager to close a deal with a buyer that has secure financing.

Tip! Explore the market and shop around to get a low cost car loan. Seek advice from banks, car dealerships and lending institutions.

Used cars loans often require a slightly higher rate, usually .6 or more, than new car loans. However, rates vary widely between lending companies, so it pays to shop around. Processing your loan before your car purchase relieves you from the pressure of signing with the first lender you find. It also saves you money in lower rates.

bPlan On 10% Down/b

10% is most often required for a used car loan. It signals to the lender that you are investing in this purchase and are willing to make payments. A larger down payment can improve rates and offset low credit scores.

Tip! Don’t get lured by the car loan rate from the manufacturer or the dealer. They can be exorbitant.

Another way to save money is to choose a short term loan. Since a used car probably won’t last as long as a new car, five and three year loans make the most financial sense. You save on interest costs and can start saving for your next car.

bShopping With A Dealer/b

Some lenders also offer better rates when you purchase through a car dealership, even with used cars. You should weigh all your options when applying for this type of car loan.

Dealerships usually provide a partial warranty for their used cars; they also charge more. You may be able to find an excellent deal in the classifieds, but there is a level of risk with that purchase. However, the difference in interest rates between these types of loans is more than 1%.

To view our list of recommended auto finance lenders online, visit this page: a target=_blank target=_new href=http://www.abcloanguide.com/autoloans.shtmlRecommended Auto Finance Lenders Online/a.

Carrie Reeder is the owner of a target=_blank target=_new href=http://www.abcloanguide.comABC Loan Guide/a, an informational website about various types of loans.

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