Cars are gradually becoming a necessity nowadays. With the convenience of travel and practicality of having a car, people are enticed to purchase a vehicle right away. The main problem is, newer car models appear to be pricey and payment methods may finish only after five years, which often marks the obsoletion of the car model.
Used car loans may be a solution to this dilemma since used cars are less costly than newer ones, plus, loan institutions can assist one to pay immediately. Availing a loan to purchase a used car is no different to that of when buying a new one.
If you are one of those car aficionados which are attracted to getting a used car loan, here are some factors to consider:
1. The credibility of the used car loan provider
You need the best partner you can get in purchasing the car. You have a wide array of choices of providers which you can browse through search engines, magazines, advertisements, and social media. Empower Federal Credit Union allows users to visualize how a particular loan program will look like once it has been availed.
Compare and contrast various car loans providers based on their client feedbacks. Bookmark the ones that you deem fit with your attitude finance-wise and level of risk-taking. To enlighten you more about how companies mainly provide loans, you may check out websites that feature reviews on used car loan providers. This will equip you with the right assumptions and expectations toward the provider and the loan you are taking.
2. A particular car that you want to buy
Before you go to an institution or someone to finance your used car, find first a vehicle that you want. As much as possible, you have to be very particular with the color, model, edition, and specifications of the used car you are planning to buy. Be wary also of the previous replacement of parts and major repairs that the vehicle has undergone before being put up for sale. This way, you will know the specific flaw to be expected of the car and other improvements it needs before it can be fully operational.
Take the car to a test drive, if possible. You do not want to find that the engines failed the exact moment after you bought the car. Likewise, it would be wise if the money you have will be used to finance the perfect and safest used car out there.
3. Payment terms of the used car loan provider
Inquire also about the payment terms. This will be one of the main bases of your plans to get a loan. With this, you will have a concrete needs assessment which will help you understand how much you will borrow from the institution and how frequent you will need the money.
The following are the main points to consider in assessing the payment terms:
Interest Rates
You have to consider how much you are going to repay. Of course, every loan has an interest that adds on to the money that you borrowed. You will have to personally inquire to or negotiate, if possible, with the provider regarding the interest rates. As a rule of thumb, the lower the interest rate, the lower the price you have to pay.
It would also be wise if they can also provide you with a proper repayment schedule. Repayment schedules place in a tabular form all the details necessary for re-paying the whole amount plus interest at a particular time frame. This can serve as a tracker for you to check when the provider expects payment and how far you are from the full repayment of your loan.
Downpayment
The downpayment also serves as a partial payment to the loan. The loan that you would want is the shortest one, since cars depreciate fast, thus lessening the item’s value the longer you pay. If you already have a significant amount of cash on hand before your application for the loan, it is suggested that you already pay the downpayment to lessen your expenses for interest and monthly installments in the future.
Processing fees
Different providers require various amounts to cover processing fees necessary for the transferring of papers and internal processing of documents. It is always best to choose the provider that has the lowest required fees.
Repayment method
This is when your negotiation skills are of great necessity. The provider will give you a specific repayment policy that you have to follow. Some providers are quite flexible in this area, while some are strict. Always put into your primary considerations your financial capability to pay in a specific timeframe and your lifestyle when coming up with the desired repayment schedule. This will also get rid of all the unnecessary hassle in paying installment.
Conclusion
Getting a new car does not necessarily need thousands of bucks for you to venture in. Used vehicles provide the same level of enjoyment and sentimentality as in buying a new model, but at a lower price. And that inexpensive price to pay for your dream car can be made less intimidating, all thanks to your partner in used car loans.
