It may sound simple and we’re sure you’ve heard it before, but the very first step you should take in getting a used auto loan is to check your credit report and credit score. This is important, because your credit report contains everything a lender sees when they’re making a decision on whether or not to approve your loan request. Once you’ve seen your credit report, the next step depends on your FICO score.
A used auto loan is all about numbers and the most important number of all is a 3 digit one known as a FICO. That three digit number (that ranges from 300-850) will establish what kind of used auto loan a customer qualifies for. If your credit score is over the 640-660 range and you have an established credit history, then there’s a fairly good chance that you will qualify for conventional financing. If you have a score below 640 or your credit history is fairly new (and you have no co-signer), then you will probably have to finance your car through a subprime lender.
Now, let’s get one thing straight: buying a used car is no longer just for those buyers who can’t afford or can’t qualify for a new vehicle loan. There are a number of reasons why a used auto loan and buying a used car makes sense:
Depreciation – New cars depreciate anywhere from 10% to 20&% the first year and from 10%-15% the second year. Buying a 2 year old car will save you from 20% to 35% off the price of a comparable new model.
Warranties – Many new cars come with full warranties that cover 5 years and up to 100,000 miles that are fully transferable to the new owner. If you buy a used car that is still under new car warranty, you can usually save money on an extended service contract when you purchase one from the vehicle manufacturer.
Certified Vehicles – Most manufacturers offer a certified used vehicle program. Although prices on these cars are generally much higher than regular used cars, the peace of mind that they offer may be worth the difference in cost.
Quality – Today’s used cars offer the highest quality in history and most are designed to last for at least 200,000 miles (with the proper maintenance).
Tags: used car financing