Get Your Credit Score
Getting a prime or low rate on a used vehicle loan will save you money throughout the life of the loan via lower monthly payments. Lenders will finance you if you have a low credit score, but the consequence of a bad credit rating is a higher interest rate. A credit score above 680 gives you access to the most competitive finance rates available. Order your credit score from MyFico.com, and if your score falls below the prime category, improve your credit before buying a used vehicle. Boost a low score by paying bills on time and reducing your credit card balances.
Car buyers typically prefer keeping their monthly payments as low as possible; therefore, they may opt for five-year, or 60-month, financing. However, a loan term of 24 or 36 months brings down the interest rate on the vehicle loan. If you can afford the higher monthly payment, you’re able to pay off the vehicle loan early.
A co-signer on your used vehicle loan application helps you get approved if you have a low credit rating or not enough income to qualify for the vehicle loan. Co-signers have legal responsibility for the vehicle, but ultimately, it’s your responsibility to make the payment to the lender each month. However, if you lose your job or can’t afford the payment, your co-signer steps in and assumes responsibility for the vehicle loan.
Cars depreciate rapidly. If you’re involved in a serious accident that damages the car, or if someone steals the automobile, your insurance company will pay only what the vehicle’s worth. In order words, if you owe the auto lender $13,000, but the car is only worth $10,000, you’ll have to pay your auto lender $3,000 out of pocket to pay off the vehicle loan. Making a down payment of 10 percent or more on your used car helps alleviate owing more than the vehicle’s worth, and it can help you get a better finance rate on the loan. If you can’t afford a down payment, consider gap insurance. This extra insurance compensates for the difference.
Honest dealers and auto finance companies often try to do everything in their power to help you acquire a low finance rate on a used car. However, some auto dealers pad or increase the interest rate in order to increase their bottom line, says Cars Direct. Securing your own financing by going to your bank or credit union helps you avoid this type of scam. If you like, get a quote from the dealership’s finance department and then compare this quote with your personal bank.
There are dozens of auto insurers – Which one will give you the best rate?
Step 1) Choose your vehicle make below.
Step 2) On the next page, complete the 4 minute questionnaire, and you'll have the opportunity compare the best rates in your area.
Step 3) Keep more money and possibly save hundreds!