In Canada, financing a car is not something everyone can afford to do. There are so many drivers who buy their vehicles from used car dealers. With such a car, they will have a means of transport and will not have to worry about the wear of a car or the price that results. That being said, when we talk about used cars, we mean something a little more cared for than your grandmother’s Corolla dating back to 1999. Often, when a used car requires consumer financing to be bought is because the car is only a few years old and its mileage is relatively low.
Despite the fact that the initial price tag is lower than that of a new vehicle, there are other factors to consider before signing anything. Do not worry, we have some tips for you, whether you are or will be looking for a used car.
Title loans online fast: easy money for you
The first and most practical option for financing a used car is to get a title loan online fast from http://texastitleloan.net/title-loans-texas/. Despite the fact that you might be tempted to choose the bank with that will offer different rates. If your bank does not offer a reasonable enough rate for a used car loan, you can still obtain financing from a different bank or caisse.
In general, most Canadians can obtain a loan to finance a used car, through a bank or car dealership, in two ways. We’re assuming here that you’re not just buying a $ 1000 vehicle from a private seller on Kijiji, but you’re looking to buy a car under the age of 10 with less than 100,000 miles on the clock. Each financing option has its own advantages and disadvantages and the choice of the option that suits you may depend on several factors. In fact, as with many types of loans, one of the most important factors that will determine your likelihood of approval will be the condition of your credit. As mentioned in several other articles, your credit rating can mean the difference between your approval or your refusal to obtain various credit products or loans. For a first financing, it can be the difference between buying a used car or not.
A word about interest rates
Before addressing the topic of financing options for used cars, we must first discuss the subject of interest rates.
Since affordability is probably the biggest problem most people face when considering buying a new or used car, the institution offering the best interest rate can to quickly pass or break a case. In terms of interest rates, it is therefore very important to do a lot of research, because each bank, dealer or other offer different rates depending on the year, the make and model of cars available. Even if the vehicle is great and you are tempted to buy it without asking any questions, choosing the right interest rate can certainly hurt your financial stability.
For example, when talking to a bank or a dealer, ask them if they offer a “fixed” or “variable” interest rate. A fixed rate means that the interest rate will stay the same regardless of the number of years you will need to repay the full amount of the loan. A variable interest rate will fluctuate depending on the market, so when the market rate changes, your rate will change as well. No matter which financing option you choose, remember that banks and dealers are also businesses. They want to take advantage of their customers and find ways to do it, no matter how beautiful they are to make it happen. This does not mean that both forms of financing are bad, you just have to consider them before choosing the option that offers a better interest rate.
Financing by a bank
Benefits of bank financing
- If you have been in a banking institution for several years, you surely have a good relationship with them. You can go there at any time of the day, discuss your situation with a finance advisor and get better advice than a simple car salesman.
- Your bank will be more reasonable during the refund process. Say you missed some payments. Certainly, this is certainly not a good habit to take since missed payments will hurt your credit rating and your car can be foreclosed. On the other hand, your bank will probably be more forgiving if you miss a payment, especially if you have a good balance sheet with them. You will surely have a penalty fee, but you will not have a collection agent immediately after you.
- Most banks are also open to trading your payment period. They want to keep you as a customer. So, if you can not pay the monthly payments you already have, you should be able to negotiate a lower payment and change the terms of your contract a while. Conversely, if you want to accelerate your payments by doing them every two weeks instead of once a month so that your term is shorter, your bank should not have a problem with it.
Disadvantages of bank financing
- Due to the depreciation of the value of used cars, banks are more reluctant to offer to finance them. Despite the fact that the value of a new car is falling rapidly, banks still tend to finance them more easily.
- Banks have stricter rules and procedures than dealers in their approval process. For example, banks require that their borrowers receive a favorable credit before granting them a car loan, even if it is a used vehicle. So if you have bad credit, financing from the dealer will be easier.
- Given their strict regulations, banks will probably not be open to changing their interest rates. You get what you see.
- You will not necessarily receive your loan immediately because the approval process takes several business days to be accepted, regardless of the quality of your credit. When you get financing at the dealership, you can buy your car and leave with the same day.
Financing by the concessionaire
The second option is to finance your used car through the dealership itself. Potential borrowers can enter, shop for cars, test, sign contracts and leave with keys at the end of the day. As in the case of banks, financing from the dealer also has these advantages and disadvantages. So before running to the nearest dealer, it is important to know what is best for your financial situation.
Benefits of Dealer Financing
- The most important benefit of financing at the dealership is, of course, the factor of convenience. As mentioned above, the application and approval process will take less time, allow you to find a car and buy it almost immediately. You do not have to find a car, then go to the bank and wait to be accepted or rejected.
- Once again, car dealers are companies that want to sell their products. Although not all dealers offer better interest rates than banks, they will likely be willing to negotiate a more reasonable rate and close the deal. Dealers may even offer bonuses such as a longer warranty, or others to improve the deal. As they try to move their inventory, dealers are more inclined than banks to finance used cars and thus help drivers with bad credit. Even if you’ve had a recent bankruptcy, you should not have as much trouble getting financing from a dealer as if you were applying to a bank.
Disadvantages of financing at the dealership
- As mentioned above, the banks will be much more reasonable regarding your payment schedule. In addition, dealers do not generally allow you to deviate from your payment plan. This means that you can not make accelerated payments, no lump sum payments and they have much less tolerance for missed payments.
- Since they must make the most of it, the interest rates at the dealership may be higher than those of a bank. The smile on the lips of the salesman does not mean that he will give you the best possible rate.
- By financing a used car at the dealership, you could end up paying more than what the car will be worth in a few years. Most dealers will charge you a large amount first, in addition to monthly payments and interest rates. So. When you have repaid your loan, you may have paid twice the value of the car.
What is the best financing option?
Between the two financing options for a used car, it can be difficult to find the option that best suits so many drivers. Each option has its advantages and disadvantages and everyone has their preference as to how they choose to repay their loans. The choice really depends on your financial situation. If you have an adverse credit rating, you will find it easier to obtain a loan from the dealer. If your credit is good and your income is high, your bank may give you a good loan. On the other hand, a good plan offered by a bank or the dealer returns may be to whom will have the best tactic of sale.
If you are trying to finance a used or new car, it is extremely important that you discuss the situation correctly, that you are aware of all the fine print of the contract and what you are getting into. A car is a big responsibility, whatever its condition. This is an investment that can cost you a lot in the long run. If your payment period is not handled properly, you could end up paying twice as much as the actual value of the car. More so since the value of the car depreciates over time. In fact, even a new car loses a lot of value as soon as you take it out of the dealership. Take your time, be patient and think carefully before buying a car simply because of its appearance or the seller’s special offer. Remember that your financial health must always be a priority.