A second-hand vehicle can make a good choice if you need a first, or replacement vehicle. Because you're not buying a brand new car, there can be potentially be more room to negotiate if it's a private sale. If you don't have the full amount ready to make your purchase, you have a range of financing options available to consider.
Guide to Used Car Loans
A used car loan is a financing option that can help you purchase a pre-owned vehicle. Lenders and financial institutions can impose certain restrictions on the age of a vehicle in order to qualify for a loan amount. Some financial institutions may only grant a loan for cars that are 2 to 5 years old, whilst other lenders may finance vehicles up to 10 years old.
Please bear in mind that the interest rate on a used car loan is generally higher than on a new car loan as the quality of your vehicle is less assured.
Used car loans are secured, so you'll need to provide details of the vehicle when you apply. Your Broker can also offer you pre-approval for the loan so you can secure the financing before you actually find your car.
Pre-approved financing gives you better negotiating power, meaning that you are able to get the vehicle you want for potentially less and shop with the power of cash. The 1800Approved obligation-free application process usually takes just a few minutes, making the process of buying a car much simpler for those who prefer to shop around for their vehicle.
Once you get pre-approved for a car loan, you can walk into a dealership with knowledge of how much you can spend and what your monthly payments on the loan will be, saving time on sale pitches and price negotiations.
Pre-approved financing gives you negotiating power that is similar to paying for the car in cash, while offering you the flexibility to take your business to another dealer if the deal offered does not suit you.
Can I get a Used Car Loan cheaper than with dealership finance?
If you've ever seen an ad for dealership finance, one thing you'll notice is the low-interest rates. These low-interest deals can be tempting, but keep in mind low ongoing repayments do not automatically mean a cheaper loan. Take a look at the following features of both the loan and the dealership finance offer to find out which one is the better deal:
- Interest rate. Dealership finance generally has lower interest rates, falling around the 2% p.a. mark, while car loans have rates around 6.5% - 13% p.a.
- Residual payments. Car loans do not require any residual (balloon) payments but dealership finance deals will. These payments usually depend on the price of the car and are usually a couple of thousand dollars at the very least to pay at the end of your loan. Dealership financiers usually make their money from people refinancing these payments.
- The price of the car. If you get your financing from the same dealership as you get your car you need to consider whether it's affecting the price of your vehicle. Sometimes, dealerships offering good financing deals cannot give as good a deal on the price of your vehicle. It pays to negotiate the price before securing your finance.
- This should not affect the price of the actual finance amount, but be wary of extras such as insurance of extended warranty offered with your finance deal. Consider what is the value of these offers.
A used car can be a better option when you're looking for your new wheels – but make sure you get the right financing and save yourself the maximum you can on your much-loved vehicle.
Good brokers know the credit buying criteria’s intimately. It is not a magic trick. Choose the right broker and the best credit deal for you will soon follow.
1800Approved is an award winning finance broker, Australia's Broker of the Year for 2016 !
We have helped tens of thousands own their dream car, motorcycle, boat, jetski or caravan.
With one enquiry only, we can can check your personal suitability for credit by comparing more than 40 lenders on your behalf.
Let us help you find the best car finance rate in Australia today.
Call us on 1800 277 768 or apply on-line. Obligation-free.