Financing a used car is always easier than obtaining funds for a new one. Most importantly, if you are wise enough, you are buying the used car after it has suffered the worst of depreciation. Just check the price guide to see when the major drop occurs. This results in sometimes ridiculously low car prices (compare the market price of a brand new and a half-year-old BMW 750 for an example). But before starting anything, we will need to take care of a few details.
Preparation is key. As it has been written in several articles, the choice of the vehicle is essential. You shouldn’t be taking up a car that you wouldn’t be able to finance. The same goes to the financing company. If they do not know how to do it, they shouldn’t’be just hanging around. And no, you shouldn’t just approve something just because it has been said by the dealer: rely on your gut feelings and choose the financer that you like the best.
Also, food for thought is the possibility to take your short-term savings (if there are any) into the car scheme. Financing the used car will be more expensive than you originally calculated, you can take that as a fact, so the less time you spend paying for it, the better. You should choose a lender specialising in used car finance; if that’s impossible, then concentrate finding a lender with good reputation: this is doubly important if you’re looking for a lender online. In this latter case you will most surely find independent websites that compare the terms, conditions and offers different lenders provide. Yes, you will find cheap used car finance opportunities, but do not forget the saying: buy cheaply, pay dearly.
Should you consider hire purchase, take the consequences into account: the car will be yours only after you have paid the last installment, until then you cannot sell your car; also, if you have an accident, then the lender may choose to terminate the contract and demand the full amount to be settled. A bit better may be if you take out a personal loan to finance your purchase: that way you are free to trade away the vehicle, and also in case of an unfortunate accident, the loan scheme remains intact.
As with every loan, the lowest rates are available to those who have the best credit ratings. You may want to look into your rating so that the results don’t surprise you.
As a summary, here are the do’s and dont’s of used car finance:
know your budget
know your needs
some research online or other ways (consumer reports, different loan opportunities etc.)
be hasty, take your time when picking your car AND when choosing your loan as well
bite more than you can swallow
ever buy anything without research
There you go, five rules of, one so important that we mention it twice: you shouldn’t leave them out of the picture. They are easy enough to follow and to keep.