Essential Guide to Used Car Finance Comparison
When it comes time to secure used car finance, not all lenders treat your credit equally. The best advice is to shop around and compare finance offers from several different lenders.
This guide covers the essential points of differentiation you’re likely to encounter with different car finance lenders. Here are five tips for used car finance that you simply cannot afford to miss.
1. Your Credit Score May be Worth More
The first thing you should know is that lenders will treat the same credit score differently. This is powerful information for car buyers, and it’s one of the reasons why it’s important to compare offers. Some lenders specialise in bad credit used car finance and may offer better rates than traditional lenders.
It is helpful to compare finance offers because some bad credit lenders prey on vulnerable consumers. It’s for precisely this reason that it is imperative to compare finance offers before signing a loan agreement.
2. Down Payment
It’s no secret that the more you pay down on your car, the lower your repayments. That stated, some lenders expect more down money than others. If you’re short on cash, you will want to look for a lender that offers low down payments.
Conversely, some lenders cap the amount of down payment you can make, thereby raising your monthly payment and the amount you’ll end up paying for the vehicle in interest. That, frankly, is the kind of thing it pays to avoid.
3. Loan Term
The duration of your loan and the interest rate dictate how much you will ultimately pay for the car. While it is tempting to stretch your repayments over a longer-term, the result is usually that you pay substantially more than you would have with a shorter loan term.
Here again, lenders will vary in terms of the duration of loans they will issue, and you will want to compare options to find the repayment structure that saves you the most money.
4. Interest Rate
Perhaps the most important factor of all is the interest rate of your loan. Assuming that you make your scheduled repayments according to plan, over the life the loan, you can end up paying thousands more than your car is worth if you agree to a less-than-desirable interest rate.
The simple truth is that one lender may offer consumers the same credit score as yours a better deal than other lenders. The only way to know if you’re getting the lowest interest rate you possibly can is to compare offers from several lenders.
5. Early Pay Off Rules
Lenders sometimes treat early payoffs differently as well. Be cautious of lenders who penalize consumers for early paying off their loans early. The ideal lender is one who will let you pay off the loan as early as possible without penalty.