Editor's choice: Carvana
- Most credit types welcome
- 45-day preapproval
- Seven-day guarantee
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While there are a variety of ways to finance a used car, these are the three most common methods:
It can be, but you should still take the time to compare loans from banks and online lenders first. Dealership financing can be quick, but it’s often more expensive than finding financing through a third-party lender. Keep these points in mind when deciding whether or not you want to use dealership financing for your used car purchase:
Lenders typically set minimum and maximum loan amounts, as well as limits to the age of the vehicle and how many miles it can have. Here’s what you can expect from some top car loan providers.
|Loan provider||Maximum age of car||Minimum loan amount||Maximum loan amount|
|Auto Credit Express||None||Varies by lender||Varies by lender|
|car.Loan.com||Varies by lender||Varies by lender||Varies by lender|
|myAutoloan.com||10 years old||$100,000|
|LendingTree||Varies by lender||Varies by lender||Varies by lender|
|CarsDirect||Varies by lender||Varies by lender||Varies by lender|
|Springboardauto||8 years old|
|Bluesky Auto Finance||8 years old||N/A||$30,000|
|CarFinance.com||8 years old||$7,500||$45,000|
Some lenders might request a deposit in three situations:
In these cases, it may be necessary to leave a deposit for your used car, but that doesn’t mean you have to settle for the dealer’s terms. Every step of a car purchase can be negotiated, and that includes your deposit.
Keep these pointers in mind before leaving a deposit on a used car:
Securing the right financing is as important as finding the right car. Here are the main components of a loan you should consider:
Used cars might be cheaper, but loans tend to come with higher interest rates. That’s because car loans are secured by the value of the vehicle you’re buying. Since used cars are worth less, your collateral isn’t as valuable. This makes lenders see you as more of a risk than a new car buyer, whose collateral is simply worth more.
Lenders tend to give borrowers with more valuable collateral lower interest rates because they stand to gain something more valuable if the borrower can’t pay back their loan.
Depreciation is often cited as the single largest expense when buying a new car. With over 40% of a new car’s value being lost to depreciation in the first three years, you can often find a better deal on a slightly used model.
Use sources like Edmunds and Kelley Blue Book to research the average price of the car you’re interested in. You’ll be able to see its original value and its estimated used value, which will then give you an idea of how much you should be paying.
By keeping depreciation in mind, you can use it in your favor to score a good deal. You’ll also be able to see the car’s estimated rate of depreciation, which can help guide you toward a car that won’t lose its value while you drive it — meaning you can sell it for a better price once you want to upgrade to a new model.
Opting for a used car can help you avoid the depreciation that comes with buying new. But you’ll want to compare your car loan options before hitting the dealership to ensure you’re getting the best deal available to you.
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