Buying a used car typically costs considerably less than a new one, but it’s still a big financial commitment. For this reason, you may choose to finance your purchase to help make it more affordable. Before starting the loan process, there are steps that can increase your chances of approval and of getting the best deal available. Here are some tips to help you through the process.
A Guide to Used Car Financing
1. Establish a Budget
Go over your income, expenses, and debts to determine how much you can comfortably afford to put toward an auto loan each month. This will provide parameters for a search and help prevent you from financing a vehicle that’s out of your price range.
2. Check Your Credit Score
Lenders will review your credit score before deciding whether to approve your loan application or not. The score also plays a role in calculating the interest rate. Lower rates are typically reserved for borrowers with a 700 score and higher. Checking your credit score offers an idea of the rate to expect and allows you to look for any errors that need to be corrected before applying.
3. Opt for the Shortest Term Possible
Auto loans typically range from three to six years. A longer term will reduce your monthly payments, but with a shorter term, you can save a significant amount in interest and pay the loan off faster. It’s usually best to select the shortest term that will allow you to keep up with your payments.
4. Make a Significant Down Payment
While you can often put down much less, an initial payment of 10% to 20% of the vehicle’s sale price will save you money over time. A large down payment reduces the amount you need to borrow, lowering your monthly rate and decreasing the amount of interest you’ll pay over the length of the loan.
If you’re in the market for a used car, visit the Crescent Ford dealership in High Point, NC. Serving the Triad area for more than 45 years, this family-owned business offers a large inventory of quality vehicles to fit every lifestyle and budget. Their friendly and knowledgeable staff will explore financing options and find the most suitable solution for your individual needs. Call (336) 869-2181 or view their website to learn more about the loan application process.