How Do You Finance A Used Car?
• Request a copy of your credit report and credit score before applying for financing. Lenders will use your credit report and score to determine whether to approve the loan, and if so what interest rate to offer you. • If your credit score is 680 or above, you are considered a prime borrower and are eligible for the best interest rates available. The higher your score, the more bargaining power you have to negotiate a low interest rate. • Contact local banks and credit unions to find out the terms and interest rates they are offering on used car loans. • Many lenders offer 5 year loans, as long as the car you are purchasing is less than 5 years old. Most vehicles older than 5 years are only eligible for 1 to 2 year loans, if the lender will even finance them. Lenders are fearful that an older car will not last for 5 years. • Solicit rate quotes from several lenders before agreeing to a loan. The interest rates offered on used car loans are generally 4 to 6 percent higher than rates of