Best Used Car Loan Rates

A car loan is money that you borrow from a bank (or another lender) to buy a new or used car (in our case, we are talking about the second option). It is based on a deposit, namely the car itself. This makes it possible to buy a car with or without a down payment.

The key characteristics of a used car loan rate  are its price, expressed as a percentage per annum, and the repayment period. You should also take into account the fees for financial services and fines that you will have to pay in case of late payments. You can freely use a car bought with a car loan, but you cannot sell, rent, exchange or donate without the lender’s permission. Until the debt is repaid, the lender will keep the vehicle registration certificate.

Therefore, car loans have the following features:

• you have to pay the first fee from your own funds. In some cases, you may be offered a preferential car loan program where this payment is absent;
• if you bought a car on credit, you are not allowed to use the vehicle for commercial or industrial activities. To buy a car for these purposes, you need to apply for a commercial car loan;
• insurance for a car bought on credit is mandatory. This approach will protect the interests of the lender and the seller in the event of the disappearance or reduction in the cost of the vehicle caused by destruction, damage, or theft;
• loan money is issued to a legal entity that transfers ownership. In this case, the seller is responsible for the delivery of the vehicle to the new owner, as well as for the transfer of the owner's status to the buyer.

There are many ways to apply for a used car rates loan. For example, you can fill out a special form on the bank's portal or visit an office. In addition, requirements for borrowers are usually posted on the official websites of credit institutions. Another way is to fill out a questionnaire on the dealer's website, indicating the model you like.

As for buying a used car from an individual using a car loan directly, you will not be able to do this. In order to conclude a purchase and vehicle sale agreement, you will need a legal entity that will act as an intermediary. Usually, the bank takes over this responsibility.

What is the current interest rate for used cars loans? The current rate depends on your credit score and credit history. Below, you’ll find a quick overview of credit scores and their impact on auto loan rates:

• excellent credit: 850 – 740 = 3.2% interest rate;
• average credit: 739 – 680 = 4.5% interest rate;
• sub-par credit: 680 and below = 6.5 – 12.9% interest rate.

As you can see, a good car loan rate can be as low as 3.2% with excellent credit and up to 12.9% with bad credit. Naturally, the higher your credit score, the lower the average interest rates. If you’re planning to buy a car, it’s a good idea to work on boosting your credit score first, so you’ll have a better chance of getting low used car loan rates. One easy way to elevate your credit score is to make small purchases on your credit card and pay them off immediately.

Before applying for a used car rates loan, you should understand that you will have to:

• leave the acquired property as a pledge. Until you pay off the loan and receive your auto passport, you will not be able to sell or rent it;
• take out insurance. As we said above, you cannot get a car loan without insurance. Also, sometimes banks impose additional insurance services. Of course, you can refuse them, but then you will not receive a loan. For your request to be approved, complete these additional insurance services, and after receiving the money within two weeks, write a waiver to the appropriate insurance company. Then the money will be returned to you;
• make an initial payment. This is not a mandatory requirement when applying for a used car rates loan, but many banks can ask you to pay some part of the cost of the car under the contract;
• check if the car you have chosen meets the bank's criteria. Since the lender takes the car as collateral, you will be presented with the criteria that the car must meet.

There is also a list of aspects that you have to pay attention to before applying for a car loan.

Consider offers from several lenders

Bank representatives may strongly recommend taking a loan from their institution. However, you should consider as many options as possible in order to choose the lowest used car loan rates.

Find out all the terms of the offer

The information that you saw in the brochure of a particular lender is true, but not complete. Therefore,In order for the contract terms to be convenient for you, you must carefully study all aspects of this contract.

Check for hidden copayments and insurances

Reread the contract carefully. This will save you from additional expenses and problems with the lender if you suddenly violate the terms of the contract due to ignorance of your obligations.

Assess your expenses and income correctly

With a used car rates loan, you need to deduct from the budget not only the monthly payments, but also related expenses: auto insurance renewal, transport tax, fuel, and so on. As a result, your expenses can increase significantly.

Credit history is information about all your loans and payments. Credit history may be “bad” due to past loan delinquencies. Therefore, the bank may refuse to issue an auto loan.

If you are at least once overdue in the payment of the loan and interest, or for some reason did not fulfill the requirements for regular payments, this fact will be displayed in the request of the bank employee. In particular, when it comes to mortgage or car loan debt with confiscation of property.

The most trivial reason for not making a payment is forgetfulness. You can cancel it by repaying the loan in full. Also, you must agree with the bank on the repayment of interest and fines.

Improving your bad credit history does not mean removing negative information about you as a bank customer from the database. This information just needs to be updated. In general, it is not possible to delete credit history information from the database. If an error is found, you should contact the bank, which must confirm that you have paid the loan rate correctly, and the information in the database is incorrect. In other cases, credit history can be restored only by signing loan agreements and fulfilling the contract obligations without delays.

You can legally correct your bad credit history only by purchasing credit products with subsequent stable debt repayment. You can order several small loans in succession from financial organizations, that is, conclude a new agreement immediately after the old one is closed. To save money, you need to take small loans from banks for a short time. When you successfully repay the issued loans, your credit history will be updated, and you will acquire the status of a reliable client.

Remember that banks usually offer high auto loan rates used cars to borrowers with a bad credit history. The reason is the increased financial risks for creditors. Therefore, you must be prepared to:

• get a lower amount than in your application;
• get a loan with a large monthly payment.

In this case, the bank will issue the purchased vehicle as a pledge.

As for the ways to get a car loan, if you have a bad credit history, there are several of them:

accept the inflated interest rate that the lender offers you;

• provide mortgaged property equivalent to the car you are going to buy;
• argue for past troubles with credit history;
• confirm the current solvency with a stable income or salary;
• find a lender who is ready to cooperate with unscrupulous borrowers.

Note that it is impossible to correct your credit history if you are a “hard-core” defaulter and most banks have blacklisted you. In this case, you will in no way be able to draw up a used car rates loan agreement in order to repay it and correct your credit history successfully.

The idea of getting a used car rates loan can be somewhat intimidating, especially to first-time buyers. However, you can easily start the process online by researching different lenders’ and credit unions’ products and services. To apply for an auto loan, you need the following documents and information:

• driver’s license or ID;
• social security number;
• steady employment & employment verification;
• proof of income;
• proof of assets.

Have questions about anything listed above? Our finance team can help! In addition to guiding you through the process of applying for an auto loan, we can answer related questions like, “Can I trade in a financed car”, or “What is in-house financing?”.

Apply for Auto Financing at Rolls Auto Sales in Philadelphia, PA

As you can see, a used car rates loan is a good financial instrument if you use it correctly. If you sign an agreement with a lender, read it carefully and clarify all the conditions. This will protect you from the risks associated with extra costs and hidden provisions (which are usually written in small letters).

Ready to get the financing process rolling? Contact us at Rolls Auto Sales to learn more about our financial services, or to schedule a test drive near Reading and Allentown. We’ll help you get behind the wheel of the vehicle you want for a monthly payment that won’t disrupt your budget!