Used Car Financing Tips
Buying a used car is a great way to cut on the expensive costs of a new ride. However, if you are looking to purchase one, there are things that you need to keep in mind to get the best possible deal. While there are numerous financing options for used cars on the market, not every option may be suitable for you.
If you are looking for used car financing in Calgary, here are tips that can help you.
Understand How Much You Can Afford
The car may be used, but you still want to ensure that it is within your budget. Figure out what you can afford while keeping in mind the monthly car loan payments and other expenses like insurance and fuel. Once you know how much you can afford, it will be easier to find the best used car financing option from a reliable used car dealership like Prime Auto Calgary.
Understand Your Credit Score
Before you visit a used car dealer, it is recommendable first to check your credit rating. Your credit score will give details of your credit history and most lenders to decide whether you qualify for an auto loan or not. If you have a low credit score, lenders are unlikely to give you a loan.
Fortunately, it is still possible to get a car loan even with a low credit score. However, the downside of this is that you will end up paying a high interest rate. Therefore, it is best first to determine your credit score and think carefully about getting a car loan if your credit is poor.
Consider Pre-Financing Options
If getting financing from a used car dealer is not an option, consider financing from institutions like banks, community banks, finance companies, and credit unions. Numerous financing institutions may be willing to give you financing at a manageable interest rate.
A good strategy is to get quotes from multiple institutions and make a comprehensive comparison before deciding. In some cases, you may want to get the quote in writing and present it to your used car dealer and see if they are willing to lower their interest rate.
It is advisable for any used cars Calgary shoppers to make a 20% down payment. By making a significant down-payment, you increase your chances of getting a good deal on your used car loan. Putting as much money down as possible decreases your loan amount, making it possible to get a shorter loan term.
It can also give you the advantage of making lower monthly payments and significantly decreasing your loan-to-value (LTV) ratio. When your LTV is lower, the lender is more likely to give you a good deal on your car loan.
Another benefit of putting as much money down as you can is that it lowers your chances of getting negative equity. This means that you won’t owe the lender more than the car’s worth, especially in cases where something happens to your car while you are still in the process of completing the loan.
When buying a used car, always negotiate the price. Unknown to most people, you have room to negotiate for your car purchase whether or not the car dealership is arranging your financing. At the end of the time, you want the best deal possible, and the dealer wants to make a profit.
If you are doing a trade-in and still want used car financing, make sure that the transactions are dealt with separately. Otherwise, salespeople are skilled and may confuse you to think that you are getting the best deal on your trade-in.
Make Cash Payment for Other Fees
After getting financing for your used car, consider paying for other fees like sales tax, documentation, and registration with cash. Otherwise, most dealerships will add these fees into your financing, and this can give you negative equity. Consequently, this will increase your auto loan, and you will pay more than the car’s actual value.
Used Car Financing Calgary
Because of the vast range of used car financing options available, finding the best deal for you can be overwhelming. Plus, there is a lot to consider to ensure that you finance your used car the smart way. Fortunately, Prime Auto Calgary can help you finance your used car successfully.