Used Car Loans

In many ways, purchasing a used car makes more sense that purchasing a new automobile. Not only do you not take the hit on the first two years of depreciation, but also you are more likely to find better price deals for dealers who want to turn the used vehicles on their lot quickly. The first thing to do in order to obtain a good used car loan is to make the best possible deal on the used car. You'll want to make sure the loan is within the guidelines established by such price guides as Kelley's and NADA. Typically a lender on a used car will require that the loan be for not more than a certain percentage of the car's market value.

Often, that percentage is 80%. So, regardless of what vehicle you choose the paperwork will need to show at least 20% of the value of the car has been paid for before the loan will be granted.You can accomplish this by showing a larger down payment or a lesser original price on the vehicle. Next, you should go on the internet and fill out one of the many loan broker application forms with the significant information. Usually within a matter of hours, you will have responses from one or more lenders who are willing to work with you to get your used car loan.

You will probably want to collect loan offers from other sources as well. Credit unions are a good source for local low cost used car loans and are often less sticky about your credit history. You'll want to be sure that you have the ability to repay, barring any totally unforeseen circumstances. Another good source for a used car loan is to take out a home equity loan. If you are a homeowner and you have equity in your home, you'll probably receive the best rate by going this route. You'll also potentially save money due to tax savings.

One other option is to visit your banking institution. Especially if you have a savings account at a bank, you will probably be approved for a loan at reasonable rates. You can also borrow against a Certificate of Deposit in some cases. Regardless of the source of your loan, you should attempt to get the term of the loan as short as possible. This will provide you with the lowest rates and the shortest term possible.

Depending on your credit score information and other financial history, you'll be offered a loan rate and terms. You should collect several of these and take the time to compare them as well as to read all the fine print. Because of the Truth-in-Lending laws in this country, the format of loans usually will be almost identical so you can be sure you're comparing like items on the loan papers. Once you've chosen your lender, the final step is to transfer the money for the auto from the lender to the car dealer and drive away in your new used vehicle.

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