Planning to buy a used car? Want to know how best to pay for one? Remember that selecting the car, though important, is only half the deal. Planning the finance is just as important.
Buying a used car is a painstaking process. First, get it evaluated professionally by an independent mechanic. Now, how do you want to pay for the car? The best way is to haggle for the lowest possible price and pay in cash or by check.
If you can’t pay all of it just now, you can take a loan. Check out your credit rating before applying for a loan. This can be done online. Different agencies offer the best deals for people with different credit ratings. The lender you choose will check you out anyway.
You could ask the used car dealer to give you the loan. This is the handiest option, and one the dealer loves. The dealer sells you the car; you sign a bunch of forms, and pay the money back over several months.
Dealers have tie-ups with several lending institutions such as banks or credit unions and will arrange finance from them. This usually gets you a variety of payment plans. The dealer gets a benefit from said lender for getting them a customer, and then charges you a finance fee as well.
Or you could directly approach the banks or credit unions and get direct financing from them. This usually gets you better payment terms, and the dealer less profit. But then you would have to do the research yourself. Try and save up some money in advance since user car financing is often more expensive than for new cars.
Warranties, insurance and accessories can add to the total cost. Remember, the dealer is trying to make a profit off you.
Which is the best plan for you? Find out the exact price of the car. How much finance are you taking? What finance charges are you paying the lender or dealer for the loan? What is the term of the loan and what will it cost you annually? What will the entire package cost you? Can you actually afford this car, or should you get something smaller? Work out the math and then decide.
Have you got any more tips for other readers who are about to buy pre-owned cars? How did you finance your car? Were you able to negotiate rates with the bank?
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