When buying a car with financial help you might get stuck with a loan that you cannot repay if you do not have the proper information. You can take the help of our ‘Used Car Financing Guide’ to get an affordable car loan which will include:
- Calculating your budget
- Finding out your credit score
- Knowing your financing options
A partnership between autogurus.co.uk and reputed financing associates will help you find competitive rates regardless of your credit score. You can ask for a free quote immediately.
You have to know how to get an affordable loan to purchase a used car. The following steps will help you to secure one that matches your budget:
Decide a reasonable budget
You have to find out how much you can afford to repay every month. The maximum payment should not be more than 5 to 10 percent of your salary that you take home whether you have one or more cars.
Calculation of Auto Loan
You have to consider things like the down payment, the value of the trade-in, total purchase price, finance rates and period of repayment while calculating the monthly EMI. Use our ‘Auto Loan Calculator’ for maximum effect.
Calculating total expenditure
Other than the monthly EMIs your outgo for owning the car also includes the following:
- Insurance – The insurance might be quite high regardless of whether the car is new or old. You will have to add the insurance value in the total cost of the car.
- Maintenance – Small expenses like the balancing or change of tires, oil change or replacement of wiper blades etc can add to the cost.
- The price of gas – You may have to pay for the extra fuel if you switch from a sedan to an SUV.
Find out your credit score
Start tracking your credit scores while you are still months away from applying for the loan. It takes more than three months to remove any inaccuracy in the reported score. A below average credit score can attract higher rates of interest for the loan. Use the calculator given our associate financers to see the effect of your credit score on the loan.
Look for any inaccuracies in the report such as accounts that are not yours, have been closed, have incorrect balances or wrong limits. If the reporting bureau fails to provide substantiating evidence, then get the inaccuracies corrected by them.
If you want to increase your credit rating to more than 620, then you can take the help of the legal assistance through out associates.
Exploring options for used car financing
Start exploring the various options available for used car financing after you have fixed your budget, calculated the total cost and obtained your credit score.
Advantages of finance offered by car dealers
Getting a loan from the dealer may be a bit expensive but carries many benefits such as:
- Multiple lenders – The car dealers can offer you the best rates as they deal with various banks.
- More options for credit – A credit union may not give you a loan with your low credit score, but the car dealer can find a lender who will.
- Tax credit – While it is different in different states, the trade-in deduction on the overall purchase price will reduce the sales tax which is possible only when you work with a car dealer.
Advantage of loans from credit unions
The second option for getting a loan is the bank or the credit union. Though the interest rates asked by the credit unions are lower than that of the banks, both options are sometimes better than car dealers such as:
- Getting early approval – You can know the amount of loan for which you are eligible beforehand which will help you to narrow down the search for the car.
- Fewer interest rates – Banks and credit unions offer lesser interest rates than car dealers. You can compare the interest rates provided by banks, credit unions, and car dealers by using the calculator provided by BankRate.com.
Before applying for the loan do your homework, set your budget and find the best interest rate available. autogurus.co.uk offers auto financing at low rates in partnership many reputed car financing companies. You can get a free quote by completing our ‘No-Obligation’ form.