Used Auto Loan Tips: Banks charge at least 2% higher APR on used car loans than they do for new auto loans. But online lenders are much cheaper, and used auto loan rates are closer to new car loan rates.
Used auto loans and used car financing
If you are buying a car from a private person, first see if you qualify for a used auto loan online for a competitive interest rate. Never pay cash for a deposit on an auto. If the deal falls through, you may never get your cash back, but you can always dispute a credit transaction.
How Much Used Auto Loan Can You Afford?
Before looking for a used auto, know how much you can afford. Banks will only lend you money to buy a used car up to 5 years old. This is why you are at a disadvantage when you trade in a used car over 4 years old at a dealer. The banks won't lend money to buy these older used cars, so they are harder to resell.
Some problems to be watchful when buying a used auto:
Prior accidents
Odometer rollback
Missing airbags
Flood damage
Mismatched VINs
Auto salvage auction sales
Stolen auto
Although a mechanic can check for obvious problems, you'll need to do a title search to learn details about the auto's history.
Tips on buying a used auto:
Search online used auto classifieds and your local newspaper. Get a 30 day unlimited Vehicle History Report from one of many online resources. Take a test drive to your mechanic, and have the auto looked over. A mechanic may only look at the engine and transmission, so you will need to inspect the trunk, upholstery and other areas. Negotiate with the seller or used car dealer. Make certain the seller has possession of the auto title, and transfers it to you immediately upon purchase, as well as providing a Bill of Sale. Most used autos are sold "As Is", but you can try to haggle for a limited warranty, such as a 30 day warranty on the engine and transmission. Don't be surprised; particularly if you're buying a used auto from an individual or an older model from a dealership, if you can't get any type of warranty. Finally, be sure the owner's name on the title is the same as the person selling the auto to you.
