Used Car Financing 101

The Yoder Chevrolet Guide to Used Car Financing

Whether you’re financing a used car, truck, or SUV, hunting for the right financing solution can feel like a maze. However, with a little guidance, you can understand the ins and outs of pre-owned car financing and avoid costly mistakes, saving thousands of dollars throughout your loan.

Car Loan Basics

First things first, let’s cover the basics of pre-owned car financing. In general, car loan requirements involve four main components:

• Down Payment: A car loan down payment is the amount you pay upfront, reducing the starting principal of the loan. For instance, if you purchase a pre-owned SUV for $20,000 and make a down payment of $5,000, you will only need financing for the remaining $15,000.
• Monthly Payments: When you finance a new vehicle, you will pay a set amount each month throughout the loan.
• Interest Rates: Used car loan rates are the percentage that lenders charge for borrowing money to purchase your vehicle. It is expressed as an annual percentage rate (APR) and is influenced by the loan amount, length of the loan, and your credit score. A lower interest rate reduces the total cost of the loan.
• Loan Term: The length of time you have to repay the loan. The loan term is typically expressed in months and is usually 36, 60, or 72 months.

Pre-Owned Auto Loan Options

There are several auto-loan options available to pre-owned car shoppers. The route you take will depend heavily on your unique financial situation. Three main options include dealership financing, bank or credit union loans, and online lenders. Each has unique pros and cons.

Financing with a dealership like Yoder Chevrolet over a great deal of convenience. You can complete the financing and shopping all in one location without involving a third-party auto financial institution; however, dealership rates are typically not as advantageous to you as other financing solutions. For instance, though they may be harder to qualify for, financing opportunities provided by banks and credit unions often offer highly competitive rates that can help you save money. Online lenders are something of a middle ground between dealership financing and traditional financing through a bank. They offer a combination of accessibility and fair rates that appeal to a wide demographic of buyers.

Low Credit Financing Options

If your credit is less than ideal, that doesn’t mean it will be impossible to finance a new vehicle. You may have to shop around a little more and will likely have higher rates than other borrowers but with the help of a good finance team, you’ll still be able to drive away in a vehicle that meets your transportation needs.

If you’re struggling with low credit and you live in the Fort Lupton area, visit the Yoder Chevrolet financing department. Our team can help you understand your options and find a solution that balances affordable monthly payments with financing rates that will help you meet your long-term financial goals. There are also a few things you can do to improve your chances of securing an auto loan.

• Increase Your Down Payment:If possible, consider putting more money down. This decreases the amount of money you need to borrow thus decreasing the borrower's risk. This can also help lower your monthly payments and your interest rates.
• Apply with a Co-Signer: Ask someone with a good credit history to co-sign your loan to help you qualify for better terms.
• Look for Special Programs: Some lenders specialize in loans for those with bad or no credit but be cautious and shop around for fair terms.

Calculating Your Monthly Payments

Knowing your monthly payments can help you decide on a vehicle and what financing options will be best for you. Use our monthly payment calculating tool to find out if your buying power is based on your desired monthly payments or what you can expect to pay based on the pre-owned vehicle that has caught your eye. If you’re ready to start shopping, use our easy, no-hassle pre-approval form online to apply for financing. We look forward to helping you get behind the wheel of your next vehicle.