CarFinance

How to finance a used car

How to finance a used car

Telling you or explaining about how to finance a used car mean is not necessary here. Just let me go straight to the point. In this article, I would be explaining step by step ways of financing a used car.

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9 steps to finance a used car:

  1. Get your credit report checked out
  2. Contact any lender
  3. Compare lenders rate and make the loan application completed
  4. Get the car checked out
  5. Make negotiation with the dealer
  6. Make your payment
  7. Get the insurance of your car covered
  8. Pay all necessary bills and fees
  9. Try other means if you can’t get loan.

How to finance a used car

Steps described for financing a used car

  • Get your credit report checked outAs though you are enthusiastic to owning a car of your own, you must check your credit report to know your credit score if you are in a very good position to finance the used car. Get your credit report and check it out well for any error an if there is any error make any necessary correction by talking to the bank and if at the end, you have a high credit score, you are good to go.
  • Contact any lender: You can contact the same bank you have had either savings account or credit account with over the years. You might be consider base on your history as a good customer but if the bank denies you of getting a credit, you can try out other bank unions around or contact any online lender. This is usually as a result of you not being a prime borrower in that bank and fortunately online lenders has their interest rate to be always low and they usually willing to finance used car.

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  • Compare lenders rate and make the loan application completedLenders have their rates usually different from one another. So you should probably contact two or more lenders top compare their rate. Certainly you would go for the one with lower rate and the one you would be able to pay. Get the loan application completed with the lender with lower rate, the online lenders give you the opportunity to complete the application online while you might need to go to bank personally to get the loan by talking to a lending agent especially if you have had problem with credit before in the bank. To fill in the application and makes it completed, you would have to provide your driver’s licence, national Identity card and your security number.
  • Get the car checked out: After choosing the car you want to finance, first thought comes in your mind is how to finance a used car. Then, you should get the car checked out for any mechanical fault, check the car report and find out how many owners have had the car in the past, if the car has been involved in any accident or if there is any criminal case on it. To check for any mechanical fault, you are not a mechanic and it is not your duty to check it yourself, you can get a mechanic check this car out for you to see if there is any fault or would be developing fault soon. Financing a faulty used car can be exhausting as you would be paying more on it if you are to calculate the maintenance cost and the interest rate on the car. If there is any criminal case on it, I will suggest you should not finance the used car only if the owner accepts to clear the case off from the criminal justice department.
  • Make negotiation with the dealer and sign every necessary form needed: Get into negotiation with the seller of the used car to be financed. You both should agree on a price that would be ok for you and know you would be able to pay the lender back if you are to finance the car. Although the price for used car is not usually negotiable but I would get into negotiation if I were you. Let the seller get the documents ready to be signed. Some documents to be signed are transfer of ownership, sales agreement form and other documents provided.
  • Make your payment: Immediately after the negotiation and document signing, you should make payment immediately or very soon as the seller may find any potential buyer is willing and ready to pay higher than you.
  • Get the insurance of the car covered: You should get insurance on the car because of the risk of any accidents or theft in the future.

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  • Pay every necessary bills and fees: The tax on the car should be paid to the government tax department. The tax on the car might be covered for that month or year but after, the tax should be paid.
  • Get other means if you cannot get a loan: You can meet the seller to owner finance the car. This is usually easier to go about but promissory note have to be signed. You can read up on owner financing from any search engine. All these above mention steps will help you in how to finance a used car and will solve all your issues regarding this topic.
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Harish Yadav

Finance and market analyst and chief writer on howtofinance. Passionate to read books and articles on marketing and accounting. Also edits other articles and publish them here.

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