Buying a used car is as easy as buying a new car

Financing for used cars is now similar to new car financing

It wasn’t too many years ago that there was a very significant difference in the interest rates available for the financing of a new car versus a used car. It could even make a large enough difference that it sometimes favored buying a new car since much of the savings in the price difference between the new and used car would be absorbed in the much higher interest rate charged for the used car financing. Fortunately that’s no longer the case. Today used car rate closely approximate new car rates for a same type car just a few years old and, of course, the credit worthiness of the person’s buying the car being the same. The net result of this change in used car financing has been to create a much larger and stronger used car sales market.

The good news for many potential auto buyers is that they can look at both new cars and used cars thereby greatly increasing their options.  If they find something that fits their needs in a used car, they won’t lose the potential savings in the financing. Recently, however, there’s been some bad news to accompany the good.  That is the prices of used cars have increased significantly. This is due to a number of factors including the simultaneous increase in the price of new cars along with increased reliability of used cars and certification programs run by the manufacturers that provide the cars with almost new car warranties as well as extended auto warranties being offered by third parties. Still in many cases, a well maintained and cared for used car is a better buy than a new car.  So if you are in the market for a car that is “new to you”, it’s very smart to look at both new and used cars. It increases your options significantly.

The next question you may have is if it’s hard to get financing for a used car versus a new? The short answer is generally NO. There are many entities that have been set up to provide used car financing even including the captive financing arms of the major automotive manufacturers. Just as with most consumer financing, the question comes down to one’s credit. If one has excellent or very good credit, financing is a snap. On the other hand if you have fair all the way down to bad credit, it gets increasingly difficult to obtain financing just about on anything.  Fortunately with poor credit auto financing, there’s developed a large market of lenders and dealers who specialize in providing car financing to those who are credit challenged. They know how to work with all credit types. 

If you are worried that your credit may not be excellent or good, here are a few pointers that should help you navigate through your options to get successfully financed.

1. Start by confirming your credit. Don’t assume you know it. This is easy to do by getting a credit report (which is free) from one of the major credit reporting agencies like Experian or TransUnion.
2. Once you know for certain about you credit and if you have good / excellent credit, you can pretty much get the financing you need anywhere. If you have fair, poor or bad credit you need to take a few more steps.
3. Be prepared to shop around for the best financing deal. Don’t waste too much time with banks and credit unions since nowadays they tend to prefer good credit. A great option is the internet. It’s full of lenders and dealers whose sole focus is providing auto financing credit to those with poor and bad credit. Its both easy and convenient to search.

If you are thinking about a car today, remember that used cars have financing almost on par with new cars and the savings versus a new car can be significant. Don’t be afraid to look at used cars due to the financing, with the internet there are many reputable lenders and dealers ready to work with those with poor to bad credit.