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The Basics of Used Car Financing

If you are one of the many Americans that need financing when buying a used vehicle, there are a few basic things you should know. There are many lenders and financing options available, making financing very confusing. It will help every consumer to know the basics of most all used-vehicle financing.

1. The Interest Rates are Higher on Used Vehicles

Used vehicle interest rates are higher than new vehicles for a few reasons, but the main reason is that used vehicles represent more risk to the lender. Used vehicles are more likely to suffer a major mechanical failure that could render them worthless (like an engine or transmission failure).

2. It's Harder To Get Financing For A Used Car Than A New Car

Oftentimes, it is much easier to get financing for a new vehicle than for a used one. Chevy, Ford, and Toyota manufacturers boost their sales by offering great financing options to their customers. Rebates and low-interest rates are two such options that are not offered with used-vehicle financing.

3. There are More Restrictions with Used-Vehicle Financing

Typically, most banks will not lend money on any used vehicle that has more than 100k miles or is more than 8 years old. These high mileage old vehicles represent much more risk for the lender because they're more likely to suffer a major breakdown. Older vehicles are also more likely to be stolen and "chopped up", making recovery impossible.

4. For Best Used-Vehicle Financing, Join the Local Credit Union.

If you are thinking about buying a used car, it is a good idea to join your local credit union. Local credit unions usually offer the best used-car financing. Their interest rates are competitive. If your credit is bad, credit unions are more likely to give you financing.

5. Most of the Time, it is a Bad Idea to Lease a Used Car

In my entire automotive career, I have never seen a used car lease that made financial sense. Typically, used car leases are structured just like new car leases, but they often have more fees. Used vehicle leases aren't usually much less expensive than a new vehicle lease, so they don't really make sense in the first place. Finally, most used vehicle leases don't protect a customer the way a new vehicle lease does, so I don't recommend a used car lease to anyone.

Article Source: http://www.uberarticles.com/articles

Author Jason Lancaster, a car business veteran, developed AccurateAutoAdvice.com. You'll find accurate advice on used car finance basics and used car finances.

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