3 Tips For Getting A Used Car Loan

Posted on: 30 December 2016

This article will discuss 3 tips for getting a used car loan

Purchase Your Used Car From A Dealership 

If you are going to need to get a loan for your used car, then you should consider purchasing it from a dealership. When you purchase a car from a dealership, banks are going to see this as a much safer investment for them than if you were to purchase your used vehicle from a private party. This is because most dealerships that sell used cars are going to make sure that the cars that they are selling are good quality cars and are going to meet your needs.

On the other hand, when a private party sells you a car, there is more risk because they don't have to meet the same codes and regulations that dealerships do. Banks realize this, so even if they do decide to give you a loan, they are likely going to give you a much higher interest rate for it. To make it easier to get a loan, to save money, and to protect yourself, purchasing a used car from a dealership is an excellent option. 

Make Sure Your Credit Score Is Good 

If the bank sees you as a high risk to lend money to, they are going to be less likely to give you a used car loan. One thing that they are going to check when they are seeing if you are approved for a loan is your credit score. If they find that your credit score is good, they will see that you know how to manage your money well and can handle paying on multiple lines of credit at the same time. They will then trust that you are going to be able to handle your used car loan the same way and won't have issues making all of your payments on time and paying off the loan in full. 

Get A Co-Signer

If your credit isn't bad but you don't have a lot of it, a bank may not be willing to lend you the money that you need for your used car loan. If this is the case, you may want to find a co-signer who can sign with you on the loan. Your co-signer is going to need to be someone who has good credit and is willing to take responsibility for the loan if for some reason you can't pay it. Having a parent, older sibling, or other relative as your co-signer is often the best option for you because you know and trust them.