Getting a Car Loan for Your Used Car Purchase

When you buy a used car, a car loan can be a great way to budget your vehicle purchase. Learn about the car financing steps you should take when you apply for an auto loan at your used vehicle dealership.

1. Assess Your Credit Score

First, you will need to assess your current credit score. Your credit score can impact how easily you can get a loan and will also be part of determining the APR on your loan. Ideally, your credit score should be around 670 or higher so you can get the best auto loan offers. 

2. Analyze Your Budget

Your next step will be to analyze your budget. You can check car prices on your dealership’s website to get a good idea of how much your used vehicle will cost. From there, you can use an online tool to estimate your monthly payments so you can see how much car you can afford. You may want to set a price range rather than a single number so your budget is more flexible as you shop for a used vehicle. 

3. Gather a Down Payment

Most finance experts agree that a 10% down payment is ideal for a used vehicle. With a 10% down payment, you will borrow less on your auto loan, which can lower your monthly payments. Of course, if you can afford a larger down payment, this can also be beneficial. 
If you are struggling to gather a down payment, you might want to consider trading in your old car at the dealership. A trade-in valuation can sometimes be used to replace a down payment, particularly if your older vehicle has a good market value or is in high demand. 

4. Compare Interest Rates

Next, you will need to compare interest rates. Your interest rate for a used vehicle loan is determined by the type of car you are buying and your credit score. Used vehicle loans tend to have higher interest rates than new vehicle loans, so it’s important to have a good credit score or lower the price of the vehicle to make your monthly payments more affordable. 

5. Customize Loan Terms

Lastly, you will want to customize the terms of your loan. The length of your auto loan can have a great impact on the cost of your monthly payments and the amount of interest you pay over the length of the loan. A short-term loan generally has higher monthly payments but less interest, while a longer loan has lower monthly payments, but costs more in overall interest. 

How Does Pre-Approval for Car Financing Work?

You can easily apply for online loan pre-approval at your dealership’s website. The application requires information about your income, your name, and whether you are applying for a loan individually or with another person. You will generally get the results of your application back in a few hours or days. 
With pre-approval and careful budget planning, it’s easy to get an auto loan for a used vehicle. Get in touch with Twins Auto of Dublin to discuss your finance options today. 

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