If you want a new car but don't have the budget, then you should go for a used vehicle. However, depending on which model you like, you will have to spend a lot of money on it. If you do not want to pay the entire sum at once, a loan especially for financing the car can be considered. Finding the right car loan for a used vehicle requires a little preliminary research.
Save on the vehicle price and avoid burdens
Just because you buy the car on credit doesn't mean that the total price no longer matters. The better you act at this point, the lower the individual installments will be. Those who do not take over at this point will benefit from lower rates that can definitely be served. You can assume that the dealer who sells you the car on credit has already priced in a certain amount of room for negotiation. Make the most of this by not giving up too early on negotiations. Argue with additional costs for repairs, if the condition of the car allows it. Finding the right car loan for a used car is easier when you ensure a fair price right from the start.
Finance regardless of the dealer
In general, you have two options for financing a used car: You can either buy the car from a dealer and take out a loan from the bank, or you can get the loan directly from the dealer. Of course, both variants have both advantages and disadvantages. Nevertheless, it is rather recommended to finance the used car independently of the dealer. The reason is simple: banks usually offer better conditions, longer terms and generally lower prices. You also have more leeway to negotiate if you pay the car in one sum, because dealers appreciate that you get the full cost straight away.
Find the right lender specifically for used cars
Not every loan can be implemented for a used car. In principle, the financing models for a new and a used car are very similar. Only the check of the actual value will usually be a little more thorough with a used car than with a new car. The so-called car banks are particularly popular when it comes to financing a used car. They have specialized in such cases and offer correspondingly favorable conditions. Alternatively, you can apply for the loan from a so-called direct bank. Depending on which bank you choose, there is a discount for used cars, which reduces the loan amount.
Not just the loan amount is crucial for profitability
To find out whether a lender is really the best or the cheapest provider, you should not look at a possible discount and the resulting loan amount alone. The total cost is not just the sum of the individual installments, but also the total interest. The effective interest rate is based, among other things, on the loan amount, the term and the amount of the individual installments. Make sure that you can use the installments without problems, but they remain high enough to keep interest rates as low as possible. The lower the interest rate, the less the car will ultimately cost effectively.
Not every used car can be financed
Before you start looking for a suitable provider, you should find out who finances a used car at all. Most lenders require that the authorization was first issued a maximum of ten years ago. If the car is older, it becomes difficult to find a suitable bank or dealer for financing. The age of the vehicle is the most common reason why the financing of the used vehicle is refused.
Find the right value
When you buy a used car, in many cases you are not only concerned with the acquisition costs. These are supplemented by the cost of repairs - be it major repairs to the gearbox, individual parts or so-called minor cosmetic repairs. You should definitely factor in the costs and apply to the lender in total so that all costs are covered - not just the net costs of the purchase. A professional as well as reputable lender will accept this approach and approve the full loan.
Improve opportunities through second borrowers
If you have found a lender with particularly favorable terms and they refuse the loan, there is a way to convince them. By specifying a second borrower, the chances of being approved can be significantly improved. In this case, the lender receives significantly more security because a second person is responsible for the loan. The prerequisite is usually that you and the second borrower have to live in one household. Here, for example, the spouse or a parent comes into consideration.
Special repayments for more flexibility and lower costs
If you opt for a dealer loan, you can expect the framework to be relatively rigid. This applies in particular to the estimated period in which the loan is to be repaid. In most cases, however, it is advantageous for the borrower if the rates can be expanded flexibly. If you unexpectedly have more cash reserves, early repayment is a good way to save interest and to be freed from the burden financially and mentally earlier.
Precisely for this reason, tariffs are to be preferred, which give you a so-called right to special repayment. It can happen, for example, that you receive a Christmas bonus, unexpectedly inherit a little money and simply build up more reserves - in this case you want to be able to determine for yourself whether you set the rates higher and can call the car your own sooner.
If the car is still sold during the term of a loan agreement, it is a great advantage if you have a contract with the right to special repayments. In this case, you can trigger the loan with the money that you hopefully received from the lucrative sale. Without a special repayment, however, it may happen that you still have to pay down installments, even though you no longer have the car.
If early repayment of the loan is made possible, borrowers usually have to pay a so-called early repayment penalty - however, this is limited by law to a certain maximum amount. This payment is intended to compensate for the loss that the bank or dealer incurs due to the early exit and the resulting lack of interest. Finding the right car loan for a used car is far from easy. If you make sure that special repayments are possible without high costs for a prepayment penalty, you still have maximum flexibility at all times.