If you are like many car buyers, you want to buy a used car instead of a new one. For many reasons, that makes a lot of sense. You might wonder, though, if car loans are available for used cars. Generally, the answer is yes. Here are some things to consider when applying for a used car loan.
Think About Purchasing at a Dealership
If you need to finance your used car purchase, you should consider buying the car from a dealership. Generally, dealers are in a better position to finance used cars than other institutions. In fact, many dealers routinely finance used car loans. While there are exceptions, banks, credit unions, and financing companies generally prefer to finance new cars. Because they have a better chance of realizing a return on their investment with new cards, traditional financing companies often have rigorous application processes for used car loans. While you might ultimately be successful, getting such a loan from a conventional lender can be extraordinarily stressful. Thus, if you want to finance a used car, you should probably buy your car at a dealership.
Know Your Credit Score
Like with financing a new car, you will be better able to negotiate beneficial used car loan terms if you know your credit score. Before you start shopping for your car, request your score from one of the credit bureaus.
Don’t Choose Too Old of a Car
The newer your used car is, the greater your odds of securing financing. While there is no absolute limit, generally cars older than four or five years are more difficult to finance. On the other hand, if you run into trouble financing your older used car, you might look for a new car. Often, those who are unable to get a used car loan have no problem with new car financing.
Before you shop for used car loans, consider the unique challenges of applying for one. By knowing what to expect, you will be in a better position to secure financing for your used car.