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How to Get a Used Car Loan

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Buying a used car is a fantastic way to work within a budget while still getting a great deal, but many people aren’t sure how to get a used car loan when it comes time to make the purchase. Because many car dealerships (and even many lenders) encourage borrowers to look at new vehicles first, it’s not always common knowledge that car loans can be used to purchase used cars, too. Not only that, but you can get a car loan to purchase a used vehicle from your local dealer… or from your local classifieds. They all work in largely the same manner

How to Get a Used Car Loan

If you’ve made the decision to buy a car, and you know you’re looking in the used market, you may still be planning to purchase your car from a dealership. Most dealerships work with both used and new vehicles, and the process won’t differ too much regardless of which type you’re planning to purchase. You should still go through the same steps you would to obtain any other type of loan, meaning you should shop around to a few different lenders, score the best rate, and then do some research on local dealers to find the car you want at the best price.

Your main caveat in this situation is going to be sticking to your guns. Regardless of what the dealership tells you, if you know you want to purchase a used car, don’t let them talk you into buying new. The package deals they offer, including warranties and maintenance, may be tempting, but if you’ve done your homework you should have already worked out the best purchase for your situation, and a dealer attempting to sway you shouldn’t affect that. If a dealer does try to get you to change your mind about something as major as purchasing used versus new, you should seriously consider finding another dealer.

Many people, when looking for a used car, like to shop out of local classifieds, or purchase cars from people they know. What most don’t realize is that it’s possible to get a car loan for this type of purchase, too, although it won’t work exactly like a typical car loan. In a regular scenario, the bank or lender purchases the car on your behalf, and your car payments each month go to paying the lender back until the car is legally yours.

Well, if you buy a car from Uncle Dave, the lender isn’t going to pay him on your behalf, but what you can do, if you can’t scrape up the purchase amount required to buy the car, is to take out a private loan from a lender who specializes in personal loans for various usages. You can then use that money to pay Uncle Dave yourself. The car will legally be yours, but the debt to the lender will still be there as a “car payment” each month. In order for this situation to work, you will likely need to have excellent credit, since (unlike a typical car loan) there is no collateral for the lender, and you’re promising payback based on your good history alone.

Car loans are fairly straightforward whether you’re buying new or used. If you’ve done research on how car loans work in general, and you’re wondering how to get a used car loan, you probably already know the answer – just a few small details may differ.

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