How to finance a used car

Posted on Wednesday, April 4, 2018 - 14:38

Do you already have your eyes set on a pre-owned vehicle that you want to own your first car or add as a second edition car that will save you money? Financing your wheels shouldn’t be a problem. You can usually get a good car loan for a used car the same way that you would finance a new car, but there are a few things that you need to consider.

There’s an age restriction

Lenders are willing to finance all types of vehicles in the used car range. They can borrow you any amount that ranges from $2,000 to $70,000 for your pre-owned wheels, but there’s an age limit that is applied to the vehicle. They won’t finance anything that will be 12 years old and above when you complete the loan term. It will be financially beneficial to you too as you don’t want to continue paying for something that is drastically depreciating.

Your car will be used as security

Even though your wheels are used wheels lenders will still use it as security against the loan you are planning to use to make sure that the payments are met. A repayment plan is always set up between you and your lender, but you must make an effort in making sure that you meet these repayments on a monthly basis. If you happen to find yourself in a tight spot to meet the repayment for a particular month you need to contact your lender as soon as possible to have the repayment waived. This is why you should check the features of a loan to see if they are flexible before signing up for one.

There is more than one way that you can finance your wheels

Knowing what type of loan will best work with your finances is essential. You can opt for a secured or an unsecured car loan to help finance your wheels, but what does this mean for you? A secured loan requires that you offer your car as security against the loan if it is eligible to be used as security. The limitation with this type of loan is that you can only borrow a loan that matches the value of your car. This is where an unsecured loan will come in handy. Although it comes with a slightly higher rate it offers more flexibility.

Do yourself a favour and compare

Whether you find comparing car loans similar to driving a stake through your own heart, or an exciting experience to clench a good deal always compare. You will be surprised at the better deals you will stumble across when comparing loans online or through a traditional channel. If you already have a car loan for your used wheels and it is not giving you what you need, then you could always consider refinancing your car loan. Just be aware that there are exit fees and set-up fees that might come with moving to greener grass, and you will need to question if the move is worth it financially.

Keep an eye out for the features

Although getting a good interest rate might be on everyone’s mind when it comes to a car loan the most important things you need to keep your eyes out for is the features of the loan. This boils down to the fees that come with it. You can ask if there are hidden fees before you sign the contract before you find any nasty surprises ahead.

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