Used Auto Loans – The Most Practical Choice to Owning Your Next Car
Being able to get a new car these days seems far-fetched for low and middle class income individuals. But is there still hope in getting a car? Yes, there is! Used cars are much cheaper. And though you may not have the cash in your pocket for a second-hand car, you can always apply for used auto loans.
Buying cars this way is a practical move. Not only are second-hand cars more affordable, but the loans for these cars also have lower interest rates. You can often find pre-owned cars that have been well-maintained with fairly low mileage at bargain prices compared to their sticker price when brand new.
However, getting used auto loans is not always a walk in the park. There are things to take note of when applying for one:
• Credit scores still play a vital role in getting loans for used cars at good interest rates. If you have a very poor credit history, then you will likely not be granted a loan. So fix your credit rating first. You can do this by correcting any errors in your credit score, using your credit cards prudently, paying your bills on time, and paying your debts down.
• It is also a must that you buy from used car dealers with good reputations. Doing this avoids the possibility of buying a stolen or smuggled car or one that has too many defects. Otherwise, arrange to have the car thoroughly checked by a qualified mechanic first.
• Before choosing the loan you will apply for, be sure to compare the offers of lending companies. Check out the lengths of payment, interest rates, etc. Keep in mind your credit rating will likely have an impact on the interest rate you end up getting.
• Choose a loan with monthly payments that fit your budget. An estimate of the monthly payment is $20 for every $1,000 borrowed. So that if you are loaned $5,000 then your monthly amortization fee is approximately $100.
• Like loans for brand new cars, have your social security number and your driver’s license ready when applying.
When you finally get your used car financing, make sure to pay your monthly dues on time. The car is your collateral for the loan. Missing a payment gives the lender the authority to take your car away. In addition, it can lower your credit score. Generally, people who pay on time have a credit score of 703. Those with late payments have 605. Having a low score will make it difficult to get another loan in the future. And if you do get another loan, this will surely have very high interest rates.
With used auto loans, you can fulfill your dreams of driving your very own car. Just make sure you choose the right loan for you and pay your monthly dues on time.
