Did you know you can buy a used car with a loan? While not as common as financing a new car, you can easily use a loan to buy used. That’s the topic of today’s blog post. Our Paris auto loan team explains everything you need to know.
The vast majority of buyers use auto loans to buy new cars but you don’t have to. You can buy nearly new or used cars with loans too if you prefer.
There are definite upsides to buy a used car with a loan, but there are downsides too.
What types of used cars can you buy with an auto loan?
You can buy whatever car you like with an auto loan. Most lenders will stipulate that it must be under 10 years old and bought from a dealership though. You cannot buy privately with an auto loan. You’ll need a personal loan for that.
Lenders prefer dealerships because there will be some kind of warranty with the car. This adds a level of protection for their investment that private sales don’t have.
Plus, most dealerships will inspect and prepare cars for sale, where a private seller won’t necessarily do that.
How much can you borrow for a used car?
For the most part, you can borrow up to the value of that used car as long as you have sufficient income and credit score to qualify for the loan.
Some lenders will allow you to borrow 100% of the car’s value, some will let you borrow more, some less.
There is no upper cash limit for used cars that we know of. It all comes down to LTV, Loan to Value, your income and your credit score.
How do you apply for a used car loan in Paris?
The application process for a used car loan is exactly the same as for a standard loan. Get your paperwork together, get your down payment ready, prepare your trade in if you have one, check your credit report, get prequalified for your auto loan and perform your car research.
Once you’re ready to buy, get prequalified for the auto loan and then proceed to the application if it all looks good.
We can help with most aspects of preparing for the loan. We can help you put together your paperwork, proof of income, get you prequalified and show you the range of auto loans you could qualify for.
Pros and cons of used car loans
There are pros and cons if you buy a used car with a loan.
Cheaper car – Buying used means a portion of the depreciation has already happened. This gets you more car for less money.
Borrow less – A cheaper car means potentially having to borrow less. That’s a very useful perk!
Strong used car market – There is an amazing array of choice for used cars right now. It’s a very strong market, while prices remain high, choice is plentiful.
Higher interest rate – Many lenders charge slightly higher interest for used car loans than standard loans.
Higher potential maintenance costs – New cars come with warranty and servicing included. A used car will have limited warranty and likely no servicing.
Paying a loan on an older car – If you’re going for a longer auto loan, you could potentially be paying for a loan on what will be an old car by the end.
For those of you who know that you have a challenging credit situation, please visit Dixie Auto Loans where we have a team of credit specialists ready to help you get approved for a car loan today!
For any questions or concerns, please don’t hesitate to contact us here!