Beyond Dealership Financing: 5 Other Options for Financing a Used Car

In 2016, auto dealers in the United States sold about 11.7 million used cars. Have you considered buying a used car? Maybe you have but, don’t know how you can afford it.

You may think putting aside savings to buy your used car is the best idea. Yet, that’s far from the truth. Financing a used car can be your best option.

It doesn’t matter if you have good or poor credit, you can finance your car. Don’t know how to get a car loan? We’ve got you covered.

We’ll tell you all about some of the best used car financing options and how to get a car loan in no time. Read on to learn more.

How to Get a Car Loan?

Getting a car loan can seem like rocket science if you have never requested car financing. It isn’t as complicated as it may seem if you have the right plan. It will all come down to your research.

The first step is taking a look at your finances. Can you afford to purchase a car? How’s your credit?

These are a few of many questions that can help you put your finances into perspective. Take a moment to look through any of the top auto blogs on the internet, and many will cover these financial and loan questions as well. It’s important to define your budget before shopping around for car financing and your used car.

If your credit is less than pretty and your finances aren’t in top shape, you shouldn’t worry. Today, you can find the best car financing options even when your financial situation isn’t the best. Before purchasing your car, you must check different financing options to choose the right one for you.

Here are 5 car financing options you should consider to purchase your next car.

1. Using a Car Loan to Finance Your Used Car

Financing a car by requesting a car loan is one of the most popular car financing options. Before applying for your loan, it’s recommended that you contact several lenders.

You should ask them about their terms and conditions, interest rates, approval requirements, loan amounts, among other details. This information can help you set your budget. You may think that your preferred bank will give you the better rates.

Yet, you shouldn’t close the door on taking your loan at another financial institution. There are many lenders that specialize in this type of loans.

Also, you should ask your potential lenders about the documentation they require to process your loan. You should know this information beforehand to prevent any delay in your car purchase.

2. Purchase Your Used Car with a Credit Card

Can you buy a car with a credit card? Many consumers ask themselves this question during their car purchase journey. While this option may seem ideal, not all car dealers accept credit card purchases. Before choosing this option, you must ask your car dealership about their accepted payment methods.

Also, you should verify your credit limit and available credit. If you don’t have the full amount, you may consider requesting a credit line increase, paying off some of your debt or splitting your purchase into several credit cards.

Keep in mind that your credit score may go down even though you aren’t taking a loan. Remember that taking more debt on your credit card will increase your credit card utilization ratio putting a dent on your scores. Also, you could consider using a cashier’s check to pay a sum and paying the rest with your credit card.

3. Requesting a Loan with No Credit Check

When you buy a used car, you need fast funding. Requesting a loan with no credit check can provide fast funding at great rates. These loans are ideal for consumers with poor credit.

These lenders don’t take your credit into consideration to extend credit. Others may do a soft credit check but, use it only as a credit history reference. These lenders take a look at everything about your finances.

It’s recommended that you ask your potential lenders about their approval requirements. If you want to learn more about this type of financing, you should check Bonsai Finance to learn more about these loans.

4. Financing a Used Car with a Credit Union

While you may be more familiar or a customer of large financial institutions, credit unions are a great option for car financing. If you want personalized service and great interest rates, these financial institutions are your best bet.

The loan application and processing of car financing at a credit union are very similar to a bank. The main difference is that credit unions are open to working with you even when your finances are less than perfect. Before applying it’s recommended that you contact your local credit union to learn more about your car financing options and their terms.

5. Getting a Bad Credit Car Loan with Your Dealership

If you don’t want to deal with a financial institution, you could consider getting your loan at your dealership. Your dealer may be open to providing a loan when your finances are in rough shape. They will collect your information and submit it to auto lenders to get several quotes. The lenders authorize a quote.

The dealer negotiates the interest rate and loan terms with you. They may charge you a higher rate than the lender quoted. Remember the dealer has to cover the costs of handling your car loan.

When you take a car loan with your dealership, they may sell your loan to the lender. After they sell it, the financial institution will own your loan and receive your monthly payments. It’s recommended that you compare the loan terms from your dealer to other lenders.

Bottom Line

There isn’t a right or wrong option when financing a used car. You must choose the type of financing that’s best for your financial situation. Your eligibility for car financing will depend on your finances, credit score and the amount you are financing.

Besides shopping around for the finest used car at the right price, you must research your financing options. It all starts with looking at your finances and determining your budget.

After defining your budget, you should take a look at your financing options. You should consult several lenders to gain insight into your eligibility for financing. Some lenders may even pre-approve your loan.

Getting pre-approved is a great way to ensure you get the right car financing. Don’t get blindsided by sticking with a lender you know, research your options and choose the best one for you.

Don’t know where to find the right used car? Read our article to learn where you buy your next car today.