Are you thinking about buying a used car, but don’t know how to get the best interest rate on a used car loan? We can help guide you in the right direction. Buying a used car and getting a loan for the car can be tough if you don’t have some kind of experience with credit or auto loans. If you just go straight to an auto dealer, and apply for financing with them, you are going to regret it unless you have immaculate credit. I’ll explain more below. The goal of this article is to show you how to get the best interest rate on a used car loan, but also to show you how to negotiate the price of your purchase so you end up getting the best deal possible.

Getting The Best Interest Rate On A Used Car Loan

Getting the best interest rate on a used car loan can be difficult, because there are so many options. If you go to a used car dealership, they will want you to apply for financing through them. I never recommend using dealership financing, for a few reasons:

Car Dealerships Get Paid By The Bank To Raise Your Interest Rate

Auto Dealerships are paid by the Bank to mark up your interest rate. So if you are approved for 2.5% but the dealer sells you the car and financing at 4%, they are going to get a commission check from the Bank. This is called “back points” and it’s why most dealers will pressure you to use their financing companies instead of using your own. These commission checks can be pretty big and the dealership does not have to disclose this on any of the documents, so you will never know how much they are getting paid.

Car Dealerships Will “Shop Around” And Cause A Bunch Of Credit Inquiries

When applying for financing through a dealership, if you don’t have perfect credit, they will usually have to “shop around” for a lender who will get you approved and pay them the most money on the back end of the deal. This will cause you to get a plethora of inquiries on your credit report and can actually weigh down your credit scores or affect your future eligibility to get financing. I’ve seen someone with over 40 inquiries in one day when they applied for financing at a dealership. Sometimes, you also risk not getting approved, so that would be even worse.

Automotive Sales People Use High Pressure Sales Tactics

As I’m sure you’ve experienced in the past, automotive dealerships are jam packed with commission based sales people who are often trained to pressure you into buying a car right then and there. This pressure can cause extra stress and cause you to get a bad deal on the car or the auto financing. I remember one time going to a dealership, the finance manager took my keys and when I was ready to walk away from the deal, they wouldn’t give them back. They were trying to get me to buy a car other than the car I wanted and the interest rate was through the roof (this was when I had bad credit and was trying to get re-established). I had to be very firm with the finance manager to give me my keys, and even threatened to call the police on them. I later filed a complaint with the BBB and FTC on this dealership.

You Will Pay Sticker Price For The Used Car

One of the big problems I see when people go out and finance a car through the dealership, they aren’t able to negotiate a better price. This isn’t always the case, but it’s rare that I see someone who got their car financed through a dealer and was able to get a lower price than the sticker price. The dealership will use any excuse to make you pay sticker price, do not fall for this. Sticker price is always marked up, so the sales people can make the buyer feel like they are getting a better deal if they lower the price. But to lower the price of the vehicle and get the best interest rate on a used car loan, you are going to want to follow the steps below…

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How To Get The Best Deal When Buying A Used Car

I’m going to show you the tricks and tactics that I personally use to get the best deal when buying a used car. First, I never recommend buying a new car, when you drive off the lot, the car looses a bunch of it’s value. That means that you’re paying interest on an asset that will never give you a return once you sell it. It’s called paying interest on a depreciating asset, it’s a bad idea. If you do have a particular car you want, you can usually find one with 10,000 miles or less for significantly cheaper than buying a new car.

Finance Your Used Car Loan At A Credit Union

I always recommend that instead of financing your car through the auto dealers lenders, you go to your local credit union and get pre-approved. You don’t even need to know what kind of car you are purchasing yet. Just go to a Credit Union and tell them you want to get pre-approved for a used car loan. They will check your credit and look at your income and let you know how much you qualify for. Once you’re approved, the Credit Union will cut you a blank check that you can use at any car dealership on any used car. It’s pretty cool! Plus, on top of that, the interest rates at a Credit Union are significantly lower than at a Bank and you aren’t risking having your rate marked up by the dealer. My favorite Credit Unions are BECU and Navy Federal.

Negotiate A Better Price On Your Vehicle Purchase

Since you are going to have a blank check that you can use at any car dealership, this gives you a HUGE advantage. This gives you the freedom to negotiate the sale price of the used car you’re purchasing. When you shop at a dealership and you finance through one of their Banks, they pretty much have you locked in to buying a car from them. If you walk away, you have to go to another dealership and have them check your credit over again, causing more inquiries. If you have a blank check from your Credit Union, you hold the power, because you can walk away or negotiate a better price on the vehicle. If you do walk away from one dealer, you aren’t going to need to get another credit inquiry, or have to deal with the application process again.

I really hope you enjoyed the information and I hope you are able to get the best interest rate on a used car loan! If you have less than perfect credit, visit our site https://www.BetterCreditGuaranteed.com for more information about how you can repair your credit.