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Financing A Used Car

Jan 15, 2008
People who buy a pre-owned car sure know how to study what they want before buying. They try to get all the information that they need, checking the integrity of the car, confirming the features it possesses, as well as negotiating to get the price that they want. Most, however, tend to overlook the possibility of losing the savings they get from purchasing a used vehicle due to an unprepared financing scheme. It's not just the car that is important; it is also how you are going to pay for it.

Know How the Business Works

How a car gets financed will affect the motivation of a seller. Dealerships, and car salesmen for that matter, earn their money not so much with the actual sale of the car but in the other end of the deal. You might be enticed by a car salesman willing to shave off a certain amount from the sticker price because they can make money through some maneuvering on car financing. Before you commit to a deal, make sure to compare a dealership's offer with the rest of the market.

If you are buying privately, note that the seller favors those who are willing to shake hands on a deal in the shortest possible time. You chances will be higher if you are already qualified to get a loan even before negotiating. If somebody else wants the same car, you can still get an advantage.

Prepare Your Financing Early

You should start revving up your credit score before revving up the engine of pre-owned cars. Banks and lenders look at your credit rating when thinking of your repayment terms and interest rates. If you see several errors in you credit report, better have them cleared up as they may affect your rating. A lower or bad credit score could mean difficult payment schemes or, worse, denial of a loan.

Once you know your credit rating is good, select the finance option that is right for you. Browse the Internet, talk to your local lending institutions, and even request referrals from your friends and relatives. Study the available interest rates, payment scheme, and how lenders and banks offer customer service. Note that customer service is very important because you don't want to get transferred from one department to another when trying to clear up a problem about your loan. Once you have picked a lender, state your interest in the loan and get pre-qualified. Being pre-qualified gives you an advantage among other buyers.

It is all nice and good to know the performance and mileage of a pre-owned car. After all, you are willing to let go of the smell of a brand-new car, in the hopes of getting a good bargain. On the other hand, you get transformed from a car expert into a wise car buyer when you know your future finances first. Make sure you are ready financially before scouting for your car. It is tried-and-tested method of getting that great value you are looking for.
About the Author
Mark Robinson writes for Auto-Loans.GuideFin.com. Visit his website for information about car loans.
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