Debunking Myths Surrounding Buying A Used Car And Finance Options
Buying a used car is an affordable way to get the ride of your dreams. New cars in Canada cost an arm and a leg and most times people acquire them through a financing plan. There is also a possibility of looking forward to buying a used car but lacking enough money. Luckily, you can look into the financing options widely available.
However, various myths surrounding used car financing that you have to understand. Perhaps you think financing for a used car is not possible. Having such thoughts is likely to delay owning your dream car until you raise enough cold cash. This article is going to highlight some of the financing options for used cars.
Online auto financing
This is a simplified way to acquire a dream car for Canadians. Car dealerships realized that many people are losing out on owning their dream cars before of the red tape involved in other financing options. In fact, you get preapproved for car financing before you hit the market to look for your dream car. Then, you find the car of your dreams from a local dealership matching your price range. You just fill out an application online and get preapproved without leaving your home.
The best thing about no credit car loans in Ottawa is that you don’t need a good credit score to get approved for a car loan. So, you now have a chance to own your dream car even with a poor credit score. Prequalifying for financing requires filling a form and the company representative will contact you to discuss the deal further.
Dealership financing
The local car dealership can also offer car financing. You just have to pick the car of your choice and organize financing with the company. The in-house financing division at the dealer will go through your application to decide whether you get approved or not. As part of the security protocol, the company financing division can check your application with various external lenders such as banks to very your creditworthiness.
You have to be prepared for the waiting period as your application awaits approval. In case your application is not approved, you will have to check other dealerships. This whole process seems frustrating and disappointing waiting for weeks and failing to get the car of your dreams.
Preapproved auto finance deals
This is understanding how much you qualify for so the lender can finance your next car purchase. Before you visit a local dealership to pick the car of your dreams, you don’t commit to anything. At the dealership, you get an opportunity to test drive the vehicle multiple times. When not satisfied, you can walk away without an obligation pay. Having a preapproval makes it easier to locate the best car deals within your budget confidently.
Car dealerships and banks offer car financing preapproval. However, there is a cap for only people with a good credit score to qualify for this financing. Additionally, applying for car finance preapproval is online giving you the freedom to do it from the comfort of your sofa or bed.
Debunking myths about used car financing
Approval is very difficult
You apply for a used car loan just like applying for a new one. The only difference is that you want a pre-owned vehicle but not a brand new one. Requirements to apply are virtually similar including personal details, the status of work, contacts, and income details. Your application to get a used car loan depends on your credit history but not the car. It only becomes difficult to get a loan for a used car if you fail to qualify for the financing option you opt for. Otherwise, a wise selection of a financing option matching your situation makes approval a breeze.
Exorbitant interest
Another common myth about loans for used cars is high interest. It is wrong to believe that loans for used cars are prohibitive. Loans for preowned vehicles are a bit higher than new cars but are affordable all the same. The slight difference is to account for the high risk of defaulting since an old car is nearing the end of its useful life. Luckily, the increase in interest rate is not more than one percent. When having a stellar credit score, the difference can be about 0.2 percent which is virtually negligible.
Very short amortization periods
The amortization period is how long to pay off the loan. This usually depends on the interest rate and age of the car. There’s a chance of getting a used car loan whose amortization period depends on subtracting the car’s age from its base value. A five-year loan might have its payment period reduced to three years if the vehicle is two years old. This ensures that the car is still valuable.
Alternatively, higher interest is applied to a used car when the payment period is longer. This high interest offsets any effects of depreciation that might happen to the value of the car. However, this financing is available to people with a good credit score.
Wrapping up
Today, a lack of finances can’t stop you from owning a used car of your dreams. You just have to debunk the various myths surrounding used car financing to get a finance option that works for you. In fact, you can get a loan for a used car even without credit.