How to Find the Best Used Car Financing Rates

When you are buying a pre-owned vehicle, you want to find the best used car financing rates available. In the past, your choice of financing was limited to the lenders in your area. Now that many institutions offer online loans, you have a broader range of sources to consider.

Online Lenders

Many online lenders offer competitive used car interest rates. If you find a lender with a good rate, you will need to complete an online loan application and submit it for approval. Once you have sent your application, you can receive a loan decision in as little as a few minutes. Make sure to search for information about the online lender’s reputation before you accept the loan offer.

If you are buying the used vehicle from a car dealer, you will have more leverage if you obtain a loan through an online source. The dealer will now consider you to be a cash buyer, which often gives you an edge as you negotiate the purchase price of the car.

Local Institutions

Contact your bank to check on the interest rate it offers on the vehicle you have decided to buy. Ask your loan officer if you can get a lower interest rate by having your monthly loan payment automatically debited from your bank account.

If you want to consider other banks in your area, many offer incentives for new customers. Free toasters have been replaced by cash incentives for opening a new bank account and by discounted loan rates for qualified customers.

Credit unions are another source to approach. Many have interest rates that are lower than local banks. You must first qualify as a member to receive a loan from a credit union. Each credit union will provide you with the necessary information about eligibility for membership.

Consumer finance companies may not have the lowest interest rates in town, but if you have had some credit issues in the past, they are a viable alternative to consider.

Car Dealer Financing

Car dealers have loan agreements with many different lenders. Once you complete the loan application, the dealer’s finance manager will send it to all of his sources at the same time. If your loan is approved by multiple lenders, you will be able to choose which one you want to provide the financing for your car.

If you have a loan approval from an outside source, you can use this to your advantage. The finance manager probably has a certain loan quota he must meet every month in order to receive a bonus. Tell him you already have financing in place with another lender. He might lower the rate he initially offered you to keep you from financing with your lender. In some instances, you can even get a lower sales price on the car if you use one of the dealer’s lenders. In either case, you would save some money by financing with the dealer.

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