If you’re interested in used car financing this year, then we have some good news (and lots of it). Before you head to the bank or used car lot to apply for a loan, here are some fast facts you should know about used car financing:
- The average price difference between new and used cars is about $20,000, according to Cars.com. In total, used car financing allows U.S. drivers to save 35 – 40% less money to get on the road.
- That’s not the only way you’ll save money, either. Usually, insurance companies will charge you less to insure the safest used cars compared to the latest new models on the lot.
- Speaking of safety, modern safety features like side air bags and antilock brakes have been standard so long that you will still find them on most pre owned vehicles today.
- When selecting a used car, you’ll usually have a far wider selection of vehicles to choose from compared to new car shoppers.
- The value of a new car starts to drop the second they drive off the lot, which means used car values often handle much better for drivers over the long haul.
What’s The Used Car Financing Process
Applying for a loan to finance a used car is not unlike applying for any other type of loan. Many car dealerships have their own financing programs, although many banks do as well.
The lender will use the total price of the car, your credit score, financial history, and the amount of money down you can offer to come up with your loan rates. If you’re lucky, you could end up with interest rates between 2 – 3%, although your mileage may vary, as they say.
If you want to get the most from your used car financing, then save up as much money as you can for the initial upfront payment. Then, try and bring your credit score as high as possible. Finally, drive within your means. Lots of people dream about driving off the lot in a shiny new sports car, but used car financing only works if you find a car for the right price.