Auto Loans for Used Vehicles
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UPDATED: Sep 12, 2011
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New vehicles may lose upwards of 20 percent of their retail value as soon as they have left the dealership. As a result, many consumers choose to purchase a used car, which can offer a price closer to the vehicle’s actual value. Obtaining financing a used vehicle is similar to financing new autos, although interest rates for used cars tend to be higher.
Dealerships focused on used car sales typically work with between five and 10 local financial institutions or private lenders, and may therefore be able to offer competitive rates on used auto loans. Consumers are obliged to weigh the potential benefit of such competition against the added charges a dealership adds to an auto loan, an amount which is not necessarily disclosed to borrowers.
Credit unions and banks are popular alternatives to used car loans from dealerships, and may offer special incentives for borrowers who already have an account. For those with good credit ratings, differences in interest rates between new and used car loans may be as little as one percent.
As with most types of loans, having a positive credit score, accepting shorter repayment periods and bringing in a cosigner can help bring down the interest rates on a used loan for autos. Refinancing a used car loan is also a cost-saving technique sometimes used to reduce financial burdens on borrowers after they’ve taken out an original loan.
Unlike new car loan refinancing, used auto loan refinancing arrangements do not involve heavy value deprecation issues. Auto loans for used vehicle are some of the most frequently sought forms of financing and can be sourced both locally and online.