Many people forget about financing options until after they’ve found the perfect used cars for sale Jacksonville. Get your vehicle loan pre-approved instead. Approximately 61% of people who buy used cars finance the purchase with a loan, as reported by Experian.
Used-car prices are often lower than new-car prices, and buying one outright might save you hundreds of dollars. However, financing a used car purchase can be costly. You may receive a fantastic rate on a car loan if you go into the process prepared, persistent, and patient.
Here is a rundown of everything you need to do to secure a pre-owned car loan.
- Before you apply, check your credit score
Your credit score is a big factor that lenders consider when deciding to provide you with a loan for a vehicle. The vast majority will look at your credit score, a summary of your financial history. The data in your credit file is used to calculate a score between 300 and 850.
Some people refer to this as their “FICO score,” albeit it’s computed using one of several other models. Most people have more than one credit score, each calculated using data from one of the three leading credit reporting agencies: Experian, TransUnion, and Equifax. Most of the time, there isn’t a huge variation in the models’ final results.
- Investigate Financial Institutions
Many people shopping for a used automobile put off considering financing until they are standing in the dealership’s finance office. If you’re seeking inexpensive vehicle loan rates, though, that’s not the greatest method to locate them. Even if the dealer’s financing is a fantastic bargain, they won’t give it to you until you already have an offer on the table.
Instead, you should look for a lender independent of the dealership and get finance approval before visiting the lot. By doing so, you may avoid a complicated jumble of the car’s price, the interest rate on loan, and the value of the trade-in you want to sell.
- Submit an Application for a Used Car Loan
Before deciding whether or not to grant a request for a vehicle loan, lenders will have applicants fill out an application.
You’ll be asked personal finance questions, including how much you borrow, how much you spend each month, how much money you bring in, and how much debt you have. Some loan providers let you apply online, with an electronic signature optional, while others stick to the tried-and-true method of paper applications and physical signatures.
In order to have a better selection of loan options, you may and should submit an application to more than one lender.
The Cost of Used-Car Financing and What You Can Do About It
Used vehicle finance often entails higher rates of interest and shorter repayment periods than new car financing, so keep that in mind when you seek used cars for sale Jacksonville loan. Financing conditions sometimes include limits on the age and cost of the automobiles eligible for financing.
What accounts for the dissimilarity? It’s related to the loan’s potential for loss. Lenders that lend money for old cars take a higher risk. A higher interest rate is included in the cost of the loan to account for the greater default risk. A smaller loss to the lender in case of non-repayment is more likely given the shorter loan durations and other constraints.