Finding the right used auto loan
Direct and Independent Finance
Finding the best deal on a used auto loan can be time consuming because it involves making the effort to shop around and compare prices. Used cars can cost almost half the price of new cars but because the cost of a car goes far beyond just the purchase price, it is wise to do some research before you even start auto shopping.
In order to make an informed decision you need to know what your finance options are and which is best for you. Used auto loans can be divided into two groups: direct financing and dealership financing.
As the title suggests, direct financing when an individual obtains an auto loan directly from a bank, credit union or financing company without going through a third party such as a dealership. Direct or independent financing is highly recommended for the following reasons:
• Negotiations are usually less arduous and a little more low-key than with dealerships.
• Enables you to shop around for the best deal before you buy a car.
• Shopping for a used auto loan before buying helps you to stick to a budget thereby helping you choose the right car.
• You can shop for loans online.
• Less dependency on a dealership. Independent financing reduces your risk of being talked out of more money.
Getting your used auto loan through a dealership can work for some people, particularly those who have excellent credit scores, as they can sometimes offer very low interest rates. It is the most commonly used method of car financing because:
• You can buy your car and get your financing at the same time so it’s convenient.
• Dealerships can offer a wide range of used auto loan options, including bad credit and zero-percent loans, with a number of banks and finance companies.
• Have better hours to suit your working week.
It’s advisable to do lots of comparison shopping not only when you’re looking for a used car but also when looking for the best deal on a used auto loan. Interest rates and services vary quite a lot, particularly if you decide to use an online lender.
Used cars are certainly cheaper to purchase but new cars usually come with lower interest rates. When buying a used car you need to consider maintenance and repair fees which will be higher than with a new car. You may find that you can get a new car for the same amount as you would have spent on a used car.