Getting The Best Used Car Loan Rates

By: Harvey Ong

A used car loan is often the best way to pay for a used car, unless the buyer actually has the cash to pay for it straight away. The average Joe takes time and prepares before purchasing a car, often spending close to an hour just negotiating the price. However, not everyone has the presence of mind to attempt to get the best used car loan rates possible. Such an oversight can be a drastic mistake, since how much one pays for the vehicle is just as important as what make and model of automobile one is actually getting. As a consequence of the above mindset, very few people know how to work around the loan rates and get the situation in their favor. To attempt to compensate for that, below are a few things to keep in mind when attempting to get the best used car loan rates.

First off, a person should do a little research on the financing companies. Potential buyers should take the time to check the policies, the reputation, and the current rates of the lending companies that are being considered. Used car loan rates are not as set in stone as most financing groups would have a buyer believe, since there are ways to make the rates go down. A buyer should ask for a quote and then compare that quote to one obtained from a different financing group. Comparing quotes both aids in the decision making process and allows the buyer to get a feel for the policy constraints of each financing institution.

Another key to obtaining the best possible used car loan rates would be offering a larger downpayment on the purchase. A larger downpayment results in lower interest rates for the loan. Since part of the price of the automobile has already been paid for, there is no need for the dealership to give the buyer a higher interest rate. Also, a larger downpayment has the potential to provide a buyer with long-term savings by reducing the amount of interest being paid for. A final benefit of a large downpayment would be the fact that it can get a buyer more favorable interest rates even if the buyer has some unfavorable details in their financial history.

Finally, finding a middle ground between the term of the loan and the interest per month is key to getting the best used car loan rates. Longer terms result in lower interest rates, which can create an ideal situation for people don't mind being in debt a little longer or people who adhere to a strict budget. On the other hand, shorter terms means larger interest payments, which are good for people who want to completely own the vehicle as soon as possible. Shorter terms are also considered advisable for people who have more financial resources on hand.

The process of obtaining the best possible used car loan rates can be as complex a task as getting the smallest possible price for a used auto, but the potential benefits are worth the effort. The average dealership normally tries to keep the rates as close to their original numbers as possible, to maximize their profit margins. However, any savvy consumer can negotiate his way to better used car loan rates if he comes prepared.

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