Why It Is So Hard to Get Used Car Loans
A used car is, of course, less desirable to own than a brand new car because mainly you do not know who has been using the car or how they have been treating it before it was sold to you. Still, for some people, a used car is more affordable than a brand new car so it is the logical type of vehicle to get under their circumstances. So how does one go about securing used car loans then?
One source indicates that it might be better to secure appropriate used car loans financing first before you try to get that ideal used car for yourself. The term for such used car loans would be pre-approved used car loans. You should seek this type of financing first because it gives you an idea of how much you can pay with your loan before you start shopping around for used cars. Also, someone who has a pretty good used car to sell to you will be happier to sell to you if you already have secure used car loans pre-arranged for you.
Generally, used car loans will charge you a slightly higher rate than new car loans. You should anticipate paying a down payment of 10% (or more, depending on the lender) as proof to the lender that you are a good borrower and have the capacity to pay back your loan. You might also have to submit proof of income, like an income tax return, and proof of billing for utilities. Though the proof of income and proof of billing are not mandatory requirements for getting a loan, they act as support documents to show you have the capacity to pay for what you use and are good indicators of how well you handle your finances. As for the down payment, the rule of thumb is that you can get better rates if you give a bigger down payment.
Lastly, since you are opting to buy a used car, you should look for used car loans using the three-year term period and the five-year term period. This allows you to get optimal use out of your car without the loan term outliving the use of your car.