3 Tips for Financing Your Used Car Purchase

October 15th, 2014 by

When the economy took a dive in 2007, people around the country began seeing used cars in a new light. With the value of a new car decreasing 30% in just the first year of ownership, it seemed much more fiscally responsible to purchase a used car instead, like a used Honda CR-V or some other model that’s become hugely popular in recent years. This opinion still stands today as the economy has yet to bounce back fully. If you are considering purchasing a used car and need to obtain financing, there are some things you can do to ensure you get the best rates and deal in Portland, South Portland, Westbrook, Falmouth, Gorham, Scarborough, Cape Elizabeth, Cumberland Center, Yarmouth, Windham, Freeport, Cumberland Foreside or your own neck of the woods.

Shop Around

Before you head out to the dealerships in and around Portland, South Portland, Westbrook, Falmouth, Gorham, Scarborough, Cape Elizabeth, Cumberland Center, Yarmouth, Windham, Freeport, Cumberland Foreside and surrounding areas, obtain a copy of your credit report, and call around to multiple banks and credit unions to see who is currently offering the best rate. Credit unions are more likely to give better interest rates than big banks, so it’s best to start there.

Most financial institutions will only provide financing for a car that is less than five years old. Cars that “young,” however, can still be a much better option than buying a new car if you’re trying to stay on a strict budget.

Pre-Qualification Letter

Once you’ve found a deal you’re happy with, ask the lender for a pre-qualification letter. A pre-qualification letter is just a letter that outlines the terms that institution can offer you. It’s a great idea to bring that pre-qualification letter with you when you start visiting car dealers because you can reference it when deciding which car to purchase.

Dealership Financing

Most auto dealerships can finance any car on their lot, too, instead of a financial institution. Dealerships will, however, always charge a higher interest rate. While you will end up paying a higher interest rate, dealerships can offer financing on any car regardless of its age. So, if you’ve found a car you’re happy with that’s more than five years old, getting financing directly through the dealer might be your only option.

If you’re going to obtain financing for a used Honda CR-V or some other Honda through a dealership near Portland, South Portland, Westbrook, Falmouth, Gorham, Scarborough, Cape Elizabeth, Cumberland Center, Yarmouth, Windham, Freeport, Cumberland Foreside or a nearby community, be sure you are prepared. Know your credit score and the rate that credit score will afford you. Avoid car dealers that may try to gouge their interest rates, and don’t be afraid to negotiate if you know the interest rate they’re offering is way too high. You can expect to pay a few points higher when obtaining financing through a dealership, and the more you know about financing, the more you will know about what to expect with the interest rate.

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