Best Used Auto Loan Interest Rate
Auto Loan Expert
Nearly everyone will need to buy a car at some point in their lives. Most car buyers will not have the ability to buy a brand new car, and so there’s a thriving used car market. However, it can be intimidating to buy a used car. There are a number of different factors that buyers need to keep track of. That’s why we’ve put together this helpful guide to help you get the best deal on a used car.
The Best Place to Buy Used Cars
One of the first issues that any used car buyer needs to resolve is where to get a used car. There are two primary options for consumers: buying a used car from a dealer, or buy from a private seller. Each of these choices has its own pros and cons.
Buying a Used Car from a Dealer
Dealers are the most common choice for used car sales. A dealer is a company that sells cars as its primary business. Many dealers get used cars as a trade in when someone buys a car from them. As a result, dealers usually have a wide selection of used cars.
Greater opportunity for warranties
Car is more likely to have routine maintenance done
Car is more likely to have been inspected
More financing options
Ability to trade in old car toward cost of your new used car
Established trust and credibility
Dealer handles title transfer and other bureaucratic processes
More likely to have vehicle history
May not be as motivated as private seller
Less ability to haggle or negotiate
May not have the type of car you’re looking for
Dealers are not as flexible as private buyers, and so the disadvantages of using a dealership all center around that lack of flexibility. Furthermore, the things that make a dealership attractive, such as tighter regulation, also have their own tradeoffs, like more paperwork.
Buying a Used Car from a Private Seller
Dealerships aren’t the only place to go for used cars. Many private individuals are also looking to sell their car directly. Private sales can be more attractive to some customers, and less attractive to others depending on their needs. There are a number of benefits to purchasing a used car from a private seller.
Easier to negotiate or haggle
Prices are usually lower
More payment options
Private sellers don’t have the overhead or organization that dealerships do, which can work to the customer’s advantage. Moreover, because buying from a private seller is a private transaction, customers can pay through any method the seller agrees. This means customers could pay with Paypal, bitcoin, or even trade labor for the car. No matter how flexible a dealership is, it is very unlikely they will let you work off the cost of your used car.
Less legal protection
No recourse through business organizations like the Better Business Bureau
Harder to verify car condition
Can’t trade in toward payment
Harder to get vehicle information
Private used car sellers don’t have the same protections that dealerships have. As a result, there are fewer options for buyers to redress issues. Moreover, buying a used car from a private individual can be unsafe, especially if the transaction involves a large amount of cash.
As you can see, private used car sellers and used car dealerships each have their own benefits and disadvantages. Buyers should carefully weigh these and determine the best used car source for them based on their needs and priorities. A buyer that needs a car quickly and is confident about their ability to evaluate the car’s condition, may prefer a private used car seller. However, buyers that lack mechanical know-how or want more protections may prefer a dealership.
Things to Check When Buying a Used Car
As with any purchase, it is important to make sure you are getting the best value when you are buying a used car. After all, no one wants to wind up with a lemon! However, cars are more complicated than many purchases that we make. In fact, it has been argued that a car is the second most complex purchase most people will make, next only to a house. There are a few things that a buyer can look into in order to determine if the car they are considering is worth the price being asked for it.
One of the first things that any savvy used car buy should consider is the vehicle’s history. Cars that have been in accidents are more likely to have underlying issues that haven’t been detected yet. Additionally, cars that have had major repair work or major components replaced are also more likely to run into problems down the road. Understanding what, if any, accidents a car has been in, and the extent of the damages, is a good indication for what you can expect from the car.
Another indicator of the car is the ownership history. Cars with more owners are more likely to encounter problems, as people are more likely to trade in or sell their car when they feel a major repair bill coming up. Cars with fewer previous owners are more likely to be taken care of and well maintained, decreasing the risk that they’ll need major repair work.
Another important factor to consider when buying a used car is the condition of the vehicle. Buyers do not need to be certified mechanics to spot many problems. For example, what is the condition of the interior? Is it clean and well cared for? Full of rips, tears, and stains? Are there handles, buttons, or levers broken? Not only will these observations give you a better idea of the value of the car, but they will also provide insight into the car itself. A used car with a ripped and stained interior is less likely to have been maintained mechanically, and thus should be a red flag.
Another thing that buyers can evaluate is the bodywork. You should be sure to check the condition of the paint, looking for dents, breaks, and scratches. Buyers can also look for signs of rust. If a car was kept in an environment that allowed rust to form in one place, than it can form in other places as well. Buyers should be especially aware of rush when buying cars from locations that get regular snowfall. The grit and salt used to keep roads safe from snow and ice can also play havoc with bodywork and mechanics.
Finally, buyers should do a visual inspection of the engine. Once again, one need not be a mechanic to make basic observations. Buyers should check for rust spots, leaks, and general condition. They should look at the belts to see how worn down they are and to check that they are properly aligned. Engines that have rust spots, leaks, or worn belts are more likely to need service in the future.
Once users have checked the interior, bodywork, and engine of a used car and found them suitable, the next step is to take the car for a test drive.
Test Drive Checklist
It is important to give the car a full evaluation before buying it, and a test drive is a great way to get an understanding not only for the condition of the car, but to determine if it is enjoyable to drive and will meet the buyer’s needs. When you’re on a test drive make sure to do/check for these things:
Visibility in front of, behind, and through
mirrors of the car
Radio/CD/SAT/Audio Input + speakers
Noise from loose or missing seals
Engine noise – it should be regular and even. Sounds that are out of rhythm or seem out of place are a red flag
Following this checklist will give you a good idea of the state of your car. Most dealerships and private sellers will also allow you to take the car to a third-party mechanic so that you can get an unbiased opinion about the car’s mechanical health, and what, if any, major repairs will be needed soon.
Paying for a Used Car
Once you’ve found a car that suits your needs and have ensured it is structurally and mechanically sound, it is time to pay for your car. While you can buy a car outright with cash, a check, cashier’s check, money order, or other method, most people will need financing. Getting a loan for a used car is a bit of a mysterious process, so here’s some things you should know:
Used car loans most often come from banks, though some dealerships will also offer financing. Most banks will allow you to pre-qualify before you start shopping for a used car. This will give you a better idea of how much of a loan you can get, so you can narrow your price range ahead of time.
Interest rates for used car loans are usually lower the newer the car is. This makes sense, as the newer the car the more value the bank can get for it should you default, therefore newer cars are a lower risk to bank. Your interest rate will be based on your credit score, and your monthly payments will be determined by the total cost of your loan. One of the best way to get your monthly payments lower is with a down payment.
The Down Payment
A down payment is how much money you pay toward the car upfront. Part of your down payment can include the value of any trade in should you use a dealership. Down payments lower the overall amount of money you will need to borrow for the car, and so make your monthly payments lower. Depending on the interest rate you are offered, it may be better to make as large of a down payment as possible to reduce the monthly bill.
Everyone who drives understands that they need car insurance. However, some people may not consider how their insurance interacts with a car loan. If you need to finance your car then it is likely your lender will require you to take out a comprehensive coverage insurance policy, which will be more than the state minimum insurance in most cases. This can add to your insurance if you previously only carried the minimum, but does protect you in case the worst happens. Having comprehensive insurance means that if your car is totaled you won’t have payments for a vehicle you no longer own or use.
The last thing that buyers have to decide is if they want any kind of warranty, assuming that is an option offered.
Advantages of Warranties
Reduced cost of routine maintenance
Reduced cost of major repairs
Protection from unknown mechanical issues
Indication of vehicle quality
Disadvantages of Warranties
Cost more money, which could mean a bigger loan
May not be used
May not cover issues that come up
Issues may not justify cost
It is up to each buyer to determine if they should get a warranty based on the car they are getting and their specific needs and budget.
As you can see, there are a number of ways to make buying a used car less stressful. Be sure to understand what you are looking for and to carefully evaluate the car before making a purchase, and you’ll find yourself on the road in no time.
Used Auto Loan Basics
In this section, you will find answers to common questions that have been asked about used auto loans.
Why do used car loans vary so much?
How to calculate EMI for used car loan?
How to calculate used car loan rates?
Divide the interest rate by the number of monthly payments then multiply by the principal amount of the loan. It may be helpful to use a car finance calculator for this.
What is the formula used to calculate a car loan?
What if I can’t get pre-approved for a used car loan?
Do banks have used car loans where the payment is less than 100.00/mo.?
What are unexpected fees when getting an auto loan for a used car?
What are the restrictions for a used car loan?
Some lenders require that a used car should not be older than 12 years of age. So if you’re applying for a 5-year used car loan, then the car should not be older than 7 years at the time of purchase.
Used Auto Loan Process
This section covers steps you need to take to get a used auto loan.
Can I get a loan on a used car?
How to get a loan for a used car from a private seller?
How to shop for a used car loan?
How to get a used car loan?
Also discuss with the lender (such as banks or private sellers) and find out the duration of the loan and interest rates before applying.
Are there credit unions who provide used car loans?
What are the qualifications for used car loan?
When buying a used car, do I apply for an auto loan or personal?
What income proof is needed for a used car purchase?
How does online used car loans work?
How can I find out if a used car has a title loan before I buy it?
Can you get a used car loan when you are a temporary?
How to cancel used car loan on the next day?
What is an unsecured used car loan?
Duration of Used Auto Loans
This section covers some questions on how long it typically takes when financing a used car.
Can you finance a used car for 84 months?
How long should you finance a used car?
Can you get a used car loan for 60 months?
Can you get a 72-month loan on a used car?
What is the longest loan term for a used car?
How long of a term can I get on a used car loan?
Used Auto Loan Interest Rates
Usually, borrowers are confused on the average interest rate they have to pay for used auto loans. In this section, you will learn some rates that are paid on used auto loans.
What is a good interest rate for a used car?
What is the lowest interest rate on a used car loan?
What is the largest used car loan?
What is a good APR for a used car loan?
What is the interest rate on a used car loan?
What is average APR for used car loan?
What is a good interest rate for a used car loan in 2018?
What is a typical certified used car loan rate?
How much is a Loan Processing fee for a used car?
What is a reasonable interest rate for a used car loan?
What is average interest rate for used car loan?
Used Auto Loan Repayment
Paying off loans seem a herculean task to some borrowers. If you want to know how to start paying off used auto loans, you will learn how in this section.
How much should I put down on a used car?
What are monthly payments on a 25000 car?
How much is a car loan for 20000?
Used Auto Loan and Credit Scores
Credit scores and credit history play an important role in getting a used auto loan. In this section, you will learn the credit score that is required for used auto loans and other ways of getting a loan with bad credit.
Can you finance a used car with bad credit?
Can you finance a used car with no credit?
Which credit bureau is most used for auto loans?
Which credit score is used for auto loans?
How to get a used car loan with bad credit?
Consider bringing a cosigner along and avoid buying the used car and paying later.
Which FICO score is used for auto loan?
Used Auto Loan Sources
Banks are a primary source for used auto loans. You can also get the loan from other sources. This section covers alternative sources for used auto loans.