Best Used Car Financing: Top Payment Plans for Low Car Payments
When car shoppers go to the lot looking for the best used car financing deals available, they may not be seeing the big picture. When it comes to getting the lowest used car financing interest rates and best overall deals on car loans, there's a lot of complexity in the picture. Buyers and those who are borrowing money through financing need to be aware of how used car financing works and how they can protect their end of the deal. Here are some ways to get better used car financing at the dealer's lot.
Talking Financing with the Dealer
One of the biggest elements of getting a good used car financing deal is to always look at the interest rate, and not the monthly payment. Dealer representatives may crow about the neat look of monthly payment options (only $199 a month!) but when it comes to the long term, you need to look at how much you will be paying out. You want the lowest APR or interest rate, and that's pretty much it. Stay away from exotic balloon loans or other deals unless you know what you're doing and are confident they will work out in your favor.
As a side point, it sometimes helps to go to dealers who have their own cash. When a dealer is financing from his or her own stash, he or she can make side deals with you to make the sale more attractive. However, when the dealer has to submit your financing to yet another lending party, the dealer's hands may be tied. Hold your dealer to a low APR and you will be paying a lot less over time.
Get Third Party Pre-Approval
Some customers are just gun-shy bout trying to get reasonable financing deals from dealers on the car lot, and many of them have reason to be this way. Lots of dealers will use all kinds of unscrupulous tactics to try to get customers to agree to poor used car financing deals. One way to get around this is with third party pre-approval. How does this work? Submit your financial details to a third party lender, and they will figure out how much you qualify for. Take your pre-approval amount to the dealer's lot, and when you have selected a vehicle, go back to the third party get the loan. For many customers, it's that simple, and third party financing helps them prevent the hard sell at the dealer's lot.
Collateral Backed Loans and Big Down Payments
Two more big ideas drive the search for the best used car financing. Collateral backed loans often lead to lower interest rates because assets stand in to guarantee payment. Another good idea is to make as large a down payment as possible on a car to make the amount of the loan a lot lower. Either of these can be a good way to go, but watch out for possible risks for collateral on loans that include this kind of provision.
Pay attention to these handy tips, and you can see a much better deal on your eventual financing deals.