Buying A Used Vehicle? What To Know About Auto Loans

7 May 2020
 Categories: , Blog


When it comes to buying a car, there are a lot of decisions to make. You will want to make sure that you choose a vehicle that works for your needs, and that is within your budget. Choosing the right make and model is likely going to be at the top of your list. Another thing to decide is whether you want a brand new vehicle or a used one. If you are planning on purchasing used and want to finance, here are three things that you should know about auto loans.

Your Interest Rates May Be Higher

The first thing that you should know when financing a used car is that your interest rate may be higher than it would if you were buying new. There are a few reasons why this may be the case. Older vehicles are often not as reliable as new ones, which makes them more of a risk for lenders. Some lenders will not offer loans for cars older than a certain number of years. Resale value on older vehicles is also less predictable, making it more of a gamble for lenders.

You Have Options

While it may be more challenging to get financing, there are plenty of lenders that offer auto loans for used cars. Shopping around and getting quotes from multiple auto loan lenders is essential. While banks are a great place to start, you can also obtain auto loans from credit unions, online lenders, and even dealerships. Before you agree to financing a car, make sure that you calculate how much you will pay in interest and other fees. Shopping around is the best method for finding the most favorable auto lending terms.

A Down Payment Helps

One reason why you may be attracted to a used vehicle is that they tend to come with lower price tags. While used cars tend to cost less, you will still want to put money down on your purchase. It's recommended that you put at least 10 percent down on a used vehicle. A down payment can help you get a loan with better terms. It also reduces the chances that you will end up underwater on your auto loan.

If you are buying a used vehicle, there are a few things to know about auto loans. First, interest rates tend to be higher on auto loans for used vehicles. This is something to keep in mind during your search. Shopping around and comparing auto loan lenders is also something that can be helpful. Getting quotes from multiple lenders will increase your odds of getting a good deal on your auto loan. A down payment is also beneficial even when purchasing a used vehicle.