Today we’re addressing one of the most common questions we hear around car buying and auto loans. Namely, buying a used car with a loan.
We asked our Mississauga auto loans team to outline the process and anything you need to know when buying used car on finance.
Can you buy a used car with a loan in Mississauga?
You can buy a used car with a Mississauga auto loan. But you have to buy it from a dealership and not privately.
You can use a personal loan to buy a car from a private seller but you cannot use an auto loan.
This is mainly down to risk. Used cars don’t have a guaranteed quality and warranty like a new car. If something goes wrong, it won’t be covered by a warranty except for the first 3 months or so.
The quality and condition of that car can not be guaranteed either.
Buying from a dealership means you’re getting certified used cars, or at least cars that have been checked over professionally. That offers some guarantee to the lender that the car is worth the money, so they will lend against it.
Buying a used car with a Loan
If you do find a used car you want in a dealership, the process is the same as if the car was new.
That means qualifying for the loan by checking your credit score and affordability, putting a down payment on the car, deciding how long your auto loan should be and setting everything up with the dealership.
The higher your credit score, the more you can borrow and the more likely you are to receive a loan offer.
If you have some time, improve your credit score as much as possible using all means at your disposal. The higher your score the lower the interest rate you’ll be charged.
While you’re doing that, get a down payment together as that will also help you afford the loan and reassure lenders you’re a good risk.
Auto loans and affordability
Affordability is a key measure the lender will undertake to ensure you can comfortably afford the loan and paying it won’t put you under financial strain. You can check it yourself using an auto loan calculator.
Deciding how long your auto loan should be is a personal decision. Shorter loans mean higher payments but shorter terms and paying less in interest. Longer loans mean lower monthly payments but paying more overall in interest.
Rates vary across all auto loan options so that shouldn’t really be a factor in this decision.
Your loan will be secured on the car you buy in exactly the same way it would if it were a new car. Only once you have paid the loan in full will you fully own the car.
We help lots of people who are buying a used car with a loan and we’d love to help you too!
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!