USED CAR FINANCING FAQs FREE ebook!
Page 2 There s no doubt that buying a car is an exciting process. You get to browse through inventories and explore possibilities. You even get to settle in behind the wheel for some test drives. It s pure fun! Of course, financing is a big part of the process, too. If you ve never bought a used car before, you might have a few questions about how things are done. Well, we ve put together this list of our top five FAQs for buying a used car. Hopefully, these will answer all the questions you currently have on your mind. If not, you can always get in touch with your local pre-owned dealership for more information. All right, let s get started
Page 3 1. How Do I Finance a Used Car with Bad Credit? This first question is one that many drivers might have on their minds as they begin the process. Even if their credit history is less than stellar, can they still purchase a car? The simple answer to that question is of course! When you re working with a reputable used car dealership, you ll have immediate access to a full team of finance professionals. Their sole job is to help you get approved for your auto loan, and they have many resources to do so. Dealerships work with many different lenders. They ll go through several of them and leave no stone unturned in procuring loan terms that are a good fit for your specific situation. If you decided to go through a credit union or your own bank, you probably wouldn t have nearly as many options. That s why it s always a good idea to hash things out with the dealership s finance team instead. Basically, all you need to do is provide them with some information (including history) and they ll take care of the majority of the work for you. Really, it s that simple.
Page 4 Tips for Financing a Used Car with Bad Credit Buying a used car with bad credit shouldn t be a problem. After all, that s what the finance team is there for. However, if you can anticipate a new car purchase a few months ahead of time, there are some things you can do to help yourself out a bit. Check your credit report. Know where your number is at well ahead of time. Then, you can spend a few months cleaning it up. That means chipping away at past due accounts, making safe purchases, and adding a bit of positive progress to that score. Draw up a new budget. You need to be aware of what you can afford beforehand, and the only way to do that is by putting together a budget. Subtract your monthly expenses from your income to get a good idea of how much wiggle room you have. Check current interest rates online. If you need to secure an auto loan, you should get an idea for current interest rates ahead of time. You can then factor these numbers into your budget, as well. It should help in developing a long-term financial picture.
Page 5 2. Can I Pre-Qualify for Used Car Financing? If you re the type of person who likes to think ahead financially, then you re probably wondering whether or not you can pre-qualify for your used car. If you re shopping at a dealership, you most certainly can. This is just one of the many areas where dealership shopping has a huge edge over independent sellers (quality assurance is another one). With a private seller, the transaction is going to happen on the spot. At the dealership, you ll have some prep time. If you want to get a jump-start, head to the finance page on your chosen dealership s website. The majority of pre-owned car dealers will have an online finance application that you can fill out from the comfort of home. Once you ve given them your information, the dealership s financiers will then review everything and promptly get back to you about your next steps. By the time you arrive at the dealership, a key part of the process will already be complete. 3. Can I Lease a Used Car? We all have a different preference when it comes to financing. Some shoppers are happy to purchase their car outright. Others, however, are more interested in leasing. Though you might assume that new cars are the only vehicles available for a lease, this isn t actually true. High-quality used and certified pre-owned cars can be leased, as well, if they re still relatively new and low in miles. Essentially, the process of leasing used is the same as new. In both cases, you ll sit down with the finance team and they ll help draw up lease terms that fit your lifestyle.
Page 6 Why Lease a Used Car? Are you unsure whether or not you should lease? Well, be aware that this option comes with plenty of pros of its own. Let s take a look at some of them now. You don t have to make a long-term commitment. Some of us have the tendency to get bored with a particular car after a few years. In this case, you ll be looking to trade in for something different. Leasing makes that easy, as the typical term length may just be a couple years. You ll always have the latest features. Cars are advancing at a rapid pace these days. After a little while, the features may start to grow outdated. When that point hits with your lease, though, you can just trade in. Trade-ins are easy. Speaking of those lease trade-ins, you ll be happy to know that they always come without hassle. When the time is up, just drop the car and the keys and move on to the next model. Monthly payments will be cheaper. This is probably the major advantage of leasing. Since you re only paying for the cost of depreciation and not for the car s entire price tag, your monthly payments are bound to go down.
Page 7 4. Do I Need to Make a Down Payment on a Used Car? When you buy a new car, you ll definitely have to pay a sizeable down payment. Still, don t think that you re going to get out of that by purchasing used instead. If you re buying a fairly inexpensive pre-owned model, one that you can pay for all at once, a down payment isn t going to be necessary. However, many used cars these days will come with a monthly payment plan of their own. In that case, to secure a reasonable loan rate and easier payments, you ll want to put some money down up front.
Page 8 Taking Care of the Down Payment If you ve been thinking of buying this car for some time, then odds are you ve been putting money aside for it. This cash can definitely be used for your down payment. However, if you don t have money squirreled away, you have another option: trade in your current vehicle. You might think that your current car isn t worth much, but odds are, you can get something for it and all of that money can be used for a down payment. So, how much can you expect for your car? A good way to check is by using the trade-in calculator on the dealership s website. An exact number will require appraisal, but online calculators are great for getting ballpark estimates.
Page 9 5. How Does Vehicle Age and Mileage Affect Financing? Now, one last aspect that you ll want to be aware of when financing your used car is that the age and mileage of the vehicle is going to affect pricing and terms. A newer car that s low in mileage hasn t had the opportunity to lose much of its value. Ultimately, you re going to have to pay for all that. Older cars are going to be less expensive. At the same time, lenders may be less willing to assign longer terms to them. So, you can t stretch out the payments and overall value as much.
Page 10 Finance a Used Car Today While these are the most common questions drivers have about financing a used car, every situation is different. Your current financing and credit may leave you with a few specific questions. If you need more answers, don t hesitate to get in touch with your local pre-owned dealership. No matter what you have on your mind, their finance team will be happy to help you out. Call your preferred used car dealer today to learn more about financing options!