Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - 30th Nov 21
Omicron Covid Wave 4 Impact on Financial Markets - 30th Nov 21
Can You Hear It? That’s the Crowd Booing Gold’s Downturn - 30th Nov 21
Economic and Market Impacts of Omicron Strain Covid 4th Wave - 30th Nov 21
Stock Market Historical Trends Suggest A Strengthening Bullish Trend In December - 30th Nov 21
Crypto Market Analysis: What Trading Will Look Like in 2022 for Novice and Veteran Traders? - 30th Nov 21
Best Stocks for Investing to Profit form the Metaverse and Get Rich - 29th Nov 21
Should You Invest In Real Estate In 2021? - 29th Nov 21
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21
Stock Maket Trading Lesson - How to REALLY Trade Markets - 26th Nov 21
SILVER Price Trend Analysis - 26th Nov 21
Federal Reserve Asks Americans to Eat Soy “Meat” for Thanksgiving - 26th Nov 21
Is the S&P 500 Topping or Just Consolidating? - 26th Nov 21
Is a Bigger Drop in Gold Price Just Around the Corner? - 26th Nov 21
Financial Stocks ETF Sector XLF Pullback Sets Up A New $43.60 Upside Target - 26th Nov 21
A Couple of Things to Think About Before Buying Shares - 25th Nov 21
UK Best Fixed Rate Tariff Deal is to NOT FIX Gas and Electric Energy Tariffs During Winter 2021-22 - 25th Nov 21
Stock Market Begins it's Year End Seasonal Santa Rally - 24th Nov 21
How Silver Can Conquer $50+ in 2022 - 24th Nov 21
Stock Market Betting on Hawkish Fed - 24th Nov 21
Stock Market Elliott Wave Trend Forecast - 24th Nov 21
Your once-a-year All-Access Financial Markets Analysis Pass - 24th Nov 21
Did Zillow’s $300 million flop prove me wrong? - 24th Nov 21
Now Malaysian Drivers Renew Their Kurnia Car Insurance Online With Fincrew.my - 24th Nov 21
Gold / Silver Ratio - 23rd Nov 21
Stock Market Sentiment Speaks: Can We Get To 5500SPX In 2022? But 4440SPX Comes First - 23rd Nov 21
A Month-to-month breakdown of how Much Money Individuals are Spending on Stocks - 23rd Nov 21
S&P 500: Rallying Tech Stocks vs. Plummeting Oil Stocks - 23rd Nov 21
Like the Latest Bond Flick, the US Dollar Has No Time to Die - 23rd Nov 21
Why BITCOIN NEW ALL TIME HIGH Changes EVERYTHING! - 22nd Nov 21
Cannabis ETF MJ Basing & Volatility Patterns - 22nd Nov 21
The Most Important Lesson Learned from this COVID Pandemic - 22nd Nov 21
Dow Stock Market Trend Analysis - 22nd Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Viable Ways to Finance a Used Car

Personal_Finance / Motoring Dec 30, 2020 - 02:41 PM GMT

By: Steve_Barker

Personal_Finance

Picture this: you’ve already done your homework on how to choose which used car to buy, but you’re still unsure how you’re going to pay for it. You ask yourself if it’s a smart move to finance a used car just as how most people would on a new car. Compared to the latter, there are several risks in financing a used car.

Generally, getting an auto loan can help you buy a car that costs more than its value by doing monthly payments. It is a matter of knowing how to borrow wisely so you can fully enjoy the benefits of a car loan. Otherwise, you’ll end up losing more cash since used cars may have higher interest rates than brand new cars. Before you take your plan to another step, take into consideration the pros and cons when financing a car compared to paying in cash.


The Pros and Cons of Financing a Used Car

Some of the top benefits you can get from this option include:

Affordable down payment

Most down payments for used cars range from 10%–20%. In some cases, dealers don’t require any down payments at all. However, this may sound appealing, but if long-term saving is your goal then this will not help you cut off the overall lifetime cost.

Dealerships offer lending choices with competitive lending programs or multiple financial options. Jonas Nielsen, CEO of AutoUncle, developed a platform that can guide buyers to find good dealerships to save time and money. This convenient option allows you to skip the separate processing with a lending company.

Keep your savings intact

Paying in cash would mean you’re getting a good chunk of money from your emergency savings which is often a bad idea. If your savings is just enough to get you that used car for yourself, spending it all might put you in big financial trouble later. By getting a financial loan, you won’t have to worry about exhausting your hard-earned savings.

Increases your credit score

If you have a bad credit score, opting for a car loan can help you recover your negative credit and start building your credit rating.

On the other hand, financing a used car may not be worth it, as some of the drawbacks you may encounter are:

Higher overall cost

Financing your car comes with interests to pay aside from your loan which adds up to the overall cost compared to cash-only transactions.

The car is not yours until you pay it off

When you finance a car, you don’t own your car until you pay it off – until then, the issuing lender holds the title, and can repossess your car if you don’t make payments

5 Tips to Help You Get Financial Support for Your Used Car

1. Ask for financing quotes

Consider asking for financial quotes from different lending companies and compare each offered rate, terms, and conditions. Some companies have competitive interest rates or give multiple offers that can help you negotiate with your dealer to get a better deal.

2. Know your credit score and choose your dealership 

Your credit score can significantly affect the type of auto loan you can get. For a good to excellent credit score that is 700 and above, you can receive quotes of around 3–4% interest. While for a score below, the interest can range from 6.5% to 15.9%.

3. Reduce your paying term as short as you can

As much as possible, aim to make the whole paying term for a short period of time. This would mean that you will be paying more cash monthly by compressing the duration. You’ll realize how much money you can save in the long run, since paying it faster means paying less interest. It’s a wise move to make for a depreciating asset.

4. Maximize your budget for the deposit

If you’re willing to take out more money for the deposit, then you’ll significantly save more money. Usually, people are encouraged to make down payments of at least 20% of the car’s total price. The reason is that this will be deducted from your initial loan. Take note that this won’t decrease the expenses, but will help you with the interest rate.

5. Recognize schemes that can cost you

Some buyers are lured to take the deal after seeing affordable monthly payments. However, the important focus should be the total cost. A good monthly rate can be tempting, but what should be considered is if it can be realistically afforded in the long run.

With the right knowledge on financing a used car, you shouldn’t be afraid of the risks to come. Before you get yourself in a deal, it’s always important to assess if you are setting off a realistic financial plan by making wise choices and avoiding appealing deals that are actually misdirected.

By Steve Barker

© 2020 Copyright Steve Barker - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in