First-time buyer? Or perhaps, you’re looking for an answer to this question: “Can I finance a used car?
The answer is simple – yes, of course, you can definitely finance a used car. But the real question here is – should you really buy a used car?
In fact, used cars have a higher risk compared to new cars but it’s indeed, less expensive than the new ones. But of course, there are several questions that require an answer in order for you to know some important factors when you consider to finance a used car. For you to find out these answers, today article is written to serve as a guide to car financing FAQs. You can bookmark this page later if you find it informative.
Ready? Okay, start your engine!
Below are the things you need to learn about used cars auto loan:
Is it True, Used Cars Have Higher Interest Rates?
Yes, it’s true. Used cars have a higher interest rate compared to brand news. Below are the reasons why:
- Resale Value: It is hard to foresee how much a used vehicle will amount on the future if you want to earn a profit, but with brand news, depreciation process is easy to tell.
- Lower Credit Score: According to some lenders, if you have a good credit score, you won’t settle for a used car. That’s why for them, people who have lower credit score will always choose a used car as an investment. Aside from that, people with lower scores can’t afford to have deals for financing a brand new car.
Disclaimer: But for some people, buying a used car is a form of being a penny-wiser. This will only mean that it’s okay for them to buy less expensive cars which can’t be a hindrance to their monthly financial obligations.
Is it True, Your Insurance Rate Could Be Higher?
The answer to this question is – might be yes and no. Generally speaking, used cars don’t have other safety features and besides they have higher mileage, this will only mean that they have a higher risk of getting damaged. Because of these risks, insurance rates for used cars might be a little bit higher compared to brand news.
But for some, it is more expensive to pay for a brand new. To be honest, since brand new cars have an expensive monthly car amortization plus the insurance, your total monthly financial obligations would be a little bit higher. Compared to used cars, since it has a low monthly car amortization, your monthly financial obligation is manageable.
Is it True, Credit Unions are Better than Banks?
If you plan to buy a used car, you need to find a lending company which can offer the lowest possible interest rate. The answer to that is – Credit Union.
Since the credit union is like a cooperative to many, most of their borrowers are members. Because you are a member, a credit union will know you very well, so you’ll get a more customized and personalized approach in the loaning process. Aside from that, if you have a bad credit score, talking to them will help you acquire a better interest rate compared to other lenders. Not only that, they’re more friendly and pleasant to talk than to car dealers and car salesmen.