Buying Smart: Things to Consider with a Used Car Loan

So, you are interested in buying a “new” used car, but you want to be sure you are getting the right ride before jumping behind the steering wheel. While many of the deciding factors rely on the make and model of your chosen vehicle, there are a few pros and cons to consider before sealing the deal.

Pro, It’s More Cost Effective: Unsurprisingly, the most common reason to choose a used car rather than a brand-new vehicle is the cost. According to data from Kelley Blue Book and Edmunds, the average used car is roughly half the price (53 percent) of a new car.

You may even be able to resell your car for roughly the same amount your paid for it; assuming the vehicle is still in good condition, hasn’t faced any recalls, or the like.

Con, Driving with Dated Technologies: The tech revolution is rapidly changing everything we come in contact with – including our cars. Built-in navigation, automated parking, backup cameras, shiny entertainments systems; it’s really surprising what’s offered in today’s newest vehicles.

Pros, It’s New to You: It doesn’t matter if your car is the flashiest automobile on the road. If it’s new to you, that’s all that really matters. By adding an iPhone jack, a bumper sticker, and a few other accoutrements, the car can suddenly feel like a home away from home.

Con, Making Compromises: Since the vehicle isn’t brand spanking new, you might have to make a few compromises. For instance, you might be limited in the color of cars available on the lot, the mileage on the odometer might be higher than you prefer, or there might be minor cosmetic damage that you won’t expect from a pristine new ride.

Of course, you’ll also need to consider how you will pay for the car. Some folks prefer to pay for their new used car in full. This is a great option if you can afford it, but since vehicles are such a costly item, it’s more likely that you’d have to finance at least some of the vehicle.

Below are a few things to consider with a used car loan.

You Can Work with the Lender

As you could probably guess, the amount you owe in interest on your loan is dependent on your credit score. The higher your credit score, the lower the APR and vice versa. Thus, if you want to keep interest costs low, you should make a large down payment on the vehicle, leverage your good credit standing and only finance a small portion of the total costs.

However, not all of us are fortunate enough have a great credit history. Even if this is the case, there are still things you can do to negotiate your monthly expenses. For instance, if you want a lower monthly car payment you can extend the terms of your contract. And if you prefer to save money in the long run, you can pay more each month.

Discuss your option with your current provider and be sure to ask plenty of question if you aren’t clear on the terms.

You Can Refinance Your Loan

If, once you’ve accepted your loan, you realize that it’s not working in your favor, you can refinance your loan with another lender. Generally, the goal behind this is to find a new loan with a low APR. This should be relatively easy to do if your credit has improved since you first took on the loan. Still, it’s wise to explore everything the lender has to offer in case there is something better fit to your needs, such as cash-back auto refinancing or refinancing for people with poor credit histories.

Hopefully this guide has given you some food for thought regarding used car loans. And now you are ready to find or refinance the car loan that best works for your lifestyle. Good luck!

Will Hopstetter
Will is an automotive market enthusiast living in the United Kingdom. He holds a diverse background in automotive and enjoys utilizing that to produce insights into the inner workings of the industry.