It’s common knowledge that a new car loses value very rapidly. A lot of people like to joke that a car goes down in value the second you drive it off the lot but the fact is that it loses value as soon as you sign the paperwork. If you choose to go with a used car you’ll save a substantial amount of money. Buying a car that is just one or two years old can be as much as 50% less expensive than buying a new car. Because a preowned car is less expensive, your loan payments will also be much more reasonable.
There are a number of different factors that will affect your used car loan rate. The dollar amount of the loan you need, the length of time you need to pay back the loan, and your credit score are all things that go into determining your loan rate. You will have to determine the dollar amount you can afford to spend on a used car. If you’re able to make a significant down payment then the amount of your loan will be smaller and so will your monthly payments. If you don’t have a lot of money for a down payment extending the length of the loan will make your monthly payments cheaper but you also want to be careful not to end up being “upside down” in your loan at some point, where you owe more than your car is worth.
If you have bad credit it can be difficult to find a lender that will want to help you purchase a car but there are companies out there that will make loans to people who have bad credit, no credit, even bankruptcies. If your credit is bad you will have to pay more for your loan than someone with a stellar credit rating but it is possible to get the loan you need and with a little comparison shopping you may even be able to find a used car loan rate that you can live with.
Obtaining financing for a vehicle purchase can actually help you to repair your credit. If your credit is less than perfect it is a good idea to try to catch up on late payments and get out of debt but if you’re able to get a car loan and you make your payments on time, you can rebuild a good credit rating by establishing a good payment history. As long as you make your monthly payments on time, you can see a significant improvement in your credit score.
After you take a look at your budget, figure out your monthly income and subtract your monthly expenses, you’ll be able to see how much you can afford to pay for a car loan. After that, you can get some quotes from a number of different lenders until you find the used car loan rate that works for you. A little time spent comparison-shopping can save you a lot of money.