Quick Cash Auto Blog

When shopping for a new car, it can be easy to overlook finance options. All too often, the excitement of getting behind the wheel of a new ride can make car shoppers eager to simply sign up for the first offer that comes their way; however, you should always seek out the best financing option before agreeing to an auto loan.

Whether you’re buying a new car or a used car, most dealerships will offer finance options. These loans will typically be made through outside lenders, and the dealership may have little control over their rates. The lender will usually pay off the car dealership in full, and then you will be responsible for paying back the lender directly. It should be noted that some dealerships will offer direct financing themselves, in which case you will be dealing only with the dealership. Regardless of what type of dealer financing offers you receive, you need to read any loan agreement carefully to make sure that you fully understand the terms and conditions. It may be boring to sit and read all of the fine print, but doing so will help you to avoid any surprises down the road.

A loan offered through a finance company will usually be based upon your credit score, but it may also be based upon things such as your current employment status, how many outstanding loans you currently have and more. The interest rate you are offered will typically be higher if you have poor credit, and lower if you have good credit. Financing a vehicle directly through the dealership may offer you a little bit more room to negotiate the terms of your loan, but this is not always the case. One advantage, however, to accepting a loan directly from a dealership is that you will usually have more of an opportunity to speak to someone about your loan face to face should you have any questions or concerns.

If you’re planning on purchasing a vehicle from a private individual, you might try seeking out financing through a bank or credit union. These establishments may offer lower interest rates and better terms, but again, this may be determined by your credit score. Most private sellers will want to be paid in full upon selling a vehicle, and many will refuse to accept payments. In these cases, it’s more beneficial to have the money up front, allowing you to purchase the vehicle outright and then simply pay back your bank or credit union.

Whether you have bad credit, have had a car repossessed in the past, or have declared bankruptcy, you may think that you will not be able to obtain financing for a vehicle until the negative items are off of your credit report. Since it takes anywhere from seven to 10 years for negative items to be removed from your report, it may be unreasonable for you to wait before purchasing your next vehicle. Use these tips to find financing despite your poor credit history.

• If you’ve had a vehicle repossessed in the past, you’ll need to pay any balance you owe on the vehicle before applying for an auto loan. Paying off the balance will boost your credit score and make financing a new vehicle more affordable as you won’t have to worry about past debt.

• Put off purchasing a vehicle for as long as you can while you work on rebuilding your credit. Avoid new debt while you work on increasing your credit score, and pay all existing bills on time. Instead of only paying the minimum amount due on credit cards and other debts, budget in a way that allows you to put the maximum amount of your income towards debt payments. This will reduce your debt and increase your credit score.

• Be aware of what is in your credit report by obtaining a copy through Experian, Equifax, or TransUnion. All three credit reporting agencies are required to provide you with a free report once per year, so this will not cost you anything.

• Start your search for a vehicle at small car lots, which are more likely to offer financing to buyers with past credit problems. Some of these lots specifically advertise their willingness to approve bad credit loans.

• To avoid credit problems in the future, buy a car that fits your budget. If you can’t afford a new car, look at used cars. Financing is available for used cars, and many are still under warranty or are certified pre-owned, meaning they have been tested for quality.

Even if you’ve had credit problems in the past, you can qualify for an auto loan. Clean up your credit as much as possible before applying for financing, and seek out small car lots that cater towards buyers with bad credit. Buy according to your budget, even if that means purchasing a used car instead of a new one.

You may find yourself in a situation in which you need to replace your current vehicle, but you cannot afford much. Whether past credit problems or a recent job loss are holding you back, having to purchase a very inexpensive used car doesn’t have to mean that you’ll be stuck with a clunker. Use these tips to fit a car into your limited budget.

• Be realistic about your budget

Set your budget according to what you can truly afford, even if that’s only $2,000. Once you’ve determined your budget, be realistic about the kind of car that would be available to you in your price range. You may find the odd car listed in your price range that wouldn’t normally fall into that range, but keep in mind that there’s likely something wrong with the vehicle. Make a list of makes, models, and years of cars that would realistically fall into your price range.

• Search for vehicles in your price range

Vehicle auctions are a good place to start looking for inexpensive cars, but remember that there may be liens on vehicles that are up for auction. Ideally, you’d like a car with a clear title that you are able to test drive, so search online classifieds and used car dealerships to locate vehicles in your area.

• Keep condition in mind

Inexpensive vehicles often have mechanical or cosmetic problems, so inquire about any problems when you call about a vehicle. Also be sure that the owner will allow you to have the car inspected by a mechanic of your choosing, but be prepared to take on the inspection cost. Only have a used car inspected if you are seriously considering buying it.

• Don’t rule out negotiations

Just because you are looking at inexpensive vehicles doesn’t mean the price is firm. You can expand your search outside of your price range and attempt to negotiate the price down. If a seller is very motivated, mention your price range during negotiations so that they know that you’ll only buy if the price comes down.

Even if you have a very tight budget, you can find a reliable car to use for your daily commuting needs. Be realistic about your budget and the type of car you can afford, and don’t forget to negotiate.

Getting a loan to purchase a used car can be different than obtaining financing for a new car. There are several factors contributing to the difference, including the useful life left in the used car and the current value of the car.

• Older cars and those with high mileage

When you’re looking for a new car to purchase, you may be looking at cars more than five years old or those with a lot of miles already on the odometer because you have a limited price range. However, be aware that banks often will not approve a loan on these types of vehicles. This is because the bank needs to be assured that the car is worth something in the event that you do not pay back the loan and the car has to be auctioned for the bank to recover some of the balance of your loan. If a car is old or has a lot of miles on it, it will likely be worth very little at auction.

• Long term loans

You may need to go with a shorter term loan to obtain financing because the used car you wish to purchase is continuously depreciating in value and may be worthless within the life of a loan, depending on how old it already is and how many miles are already on the odometer. If you’re purchasing a car that is only two or three years old, you may be able to qualify for a long term loan to make payments more affordable.

Once you find a used car that qualifies for financing, be sure that you are obtaining fair financing terms.

• Research interest rates

To know what a fair rate is for you in particular, know your credit score before shopping for a used vehicle. There are websites that you can access that estimate the average financing rate for a person with your credit rating, based on the price of the car and the length of the loan. Use these estimates as a guide when you’re out shopping, so that you can be sure you are not unjustly being offered a high interest rate.

When shopping for a used vehicle, first be sure that the vehicles you are looking at qualify for financing. Once you have determined that you will be able to obtain financing, research fair rates and terms so that you’re not paying more than you should for your auto loan.