Used Auto Loans

You’ve probably heard this many times, but the first step you should take before getting a used auto loan is to check your Beacon score. The reasoning for following this particular procedure is the fact that your credit report contains everything a lender sees when they’re making a decision regarding your auto loan application. If there are any mistakes that might result in a lower credit score, you’ll want to correct them before applying for a used auto loan, since it usually takes at least 30 days for any correction to appear.

Like any loan, a used auto loan is all about numbers. And the most important number of all is a 3 digit one known as your FICO score. That three digit number (ranging from 300-850) will establish what kind of used auto loan you qualify for. If your credit score is over the 640-660 range and you have an established credit history, then there’s a fairly good chance that you will qualify for conventional financing in either the near-prime or prime range. If you have a score below 640 or your credit history is fairly short (and you have no co-signer), then you will probably have to finance your car through a bad credit car loan lender.

You should know that purchasing a vehicle with a used auto loan is no longer just for those consumers who can’t afford or can’t qualify for a new car loan. There are at least 4 reasons why a used auto loan and buying a pre-owned vehicle makes sense:

1. Depreciation – New cars depreciate anywhere from 10% to 30% the first year and from 10%-15% the second year. Buying a 2 year old car will save you from 20% to 45% off the price of a comparable new model.
2. Warranties – Many new cars come with full warranties that cover 5 years and up to 100,000 miles that are fully transferable to the next owner. If you buy a used car that is still under new car warranty, you can usually save money on an extended service contract when you purchase one from the vehicle manufacturer.
3. Certified Vehicles – Most manufacturers offer a certified pre owned (CPO) program. Although prices on these cars are usually higher than their non-certified counterparts, the peace of mind a CPO vehicle can offer may be worth the difference in cost.
4. Quality – Today’s used cars offer the highest quality in history and, given the proper maintenance, most will last for at least 200,000 miles.

Tags: bad credit car loans, special finance, Used Cars