Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
US Debt and Yield Curve (Spread between 2 year and 10 year US bonds) - 24th Feb 21
Should You Buy a Landrover Discovery Sport in 2021? - 24th Feb 21
US Housing Market 2021 and the Inflation Mega-trend - QE4EVER! - 24th Feb 21
M&A Most Commonly Used Software - 24th Feb 21
Is More Stock Market Correction Needed? - 24th Feb 21
VUZE XR Camera 180 3D VR Example Footage Video Image quality - 24th Feb 21
How to Protect Your Positions From A Stock Market Sell-Off Using Options - 24th Feb 21
Why Isn’t Retail Demand for Silver Pushing Up Prices? - 24th Feb 21
2 Stocks That Could Win Big In The Trillion Dollar Battery War - 24th Feb 21
US Economic Trends - GDP, Inflation and Unemployment Impact on House Prices 2021 - 23rd Feb 21
Why the Sky Is Not Falling in Precious Metals - 23rd Feb 21
7 Things Every Businessman Should Know - 23rd Feb 21
For Stocks, has the “Rational Bubble” Popped? - 23rd Feb 21
Will Biden Overheat the Economy and Gold? - 23rd Feb 21
Precious Metals Under Seige? - 23rd Feb 21
US House Prices Trend Forecast Review - 23rd Feb 21
Lithium Prices Soar As Tesla, Apple And Google Fight For Supply - 23rd Feb 21
Stock Markets Discounting Post Covid Economic Boom - 22nd Feb 21
Economics Is Why Vaccination Is So Hard - 22nd Feb 21
Pivotal Session In Stocks Bull Bear Battle - 22nd Feb 21
Gold’s Downtrend: Is This Just the Beginning? - 22nd Feb 21
The Most Exciting Commodities Play Of 2021? - 22nd Feb 21
How to Test NEW and Used GPU, and Benchmark to Make sure it is Working Properly - 22nd Feb 21
US House Prices Vaccinations Indicator - 21st Feb 21
S&P 500 Correction – No Need to Hold Onto Your Hat - 21st Feb 21
Gold Setting Up Major Bottom So Could We See A Breakout Rally Begin Soon? - 21st Feb 21
Owning Real Assets Amid Surreal Financial Markets - 21st Feb 21
Great Investment Ideas For 2021 - 21st Feb 21
US House Prices Momentum Analysis - 20th Feb 21
The Most Important Chart in Housing Right Now - 20th Feb 21
Gold Is the Ultimate Reserve Asset - 20th Feb 21
Is That the S&P 500 And Gold Correction Finally? - 20th Feb 21
Technical Analysis of EUR/USD - 20th Feb 21
The Stock Market Big Picture - 19th Feb 21
Could Silver "Do a Palladium"? - 19th Feb 21
Three More Reasons We Love To Trade Options! - 19th Feb 21
Here’s What’s Eating Away at Gold - 19th Feb 21
Stock Market March Melt-Up Madness - 19th Feb 21
Land Rover Discovery Sport Extreme Ice and Snow vs Windscreen Wipers Test - 19th Feb 21
Real Reason Why Black and Asian BAME are NOT Getting Vaccinated - NHS Covid-19 Vaccinations - 19th Feb 21
New BNPL Regulations Leave Zilch Leading the Way - 19th Feb 21
Work From Home Inflationary House Prices BOOM! - 18th Feb 21
Why This "Excellent" Stock Market Indicator Should Be on Your Radar Screen Now - 18th Feb 21
The Commodity Cycle - 18th Feb 21
Silver Backwardation and Other Evidence of a Silver Supply Squeeze - 18th Feb 21
Why I’m Avoiding These “Bottle Rocket” Stocks Like GameStop - 18th Feb 21
S&P 500 Correction Delayed Again While Silver Runs - 18th Feb 21
Silver Prices Are About to Explode as Stars are Lining up Like Never Before! - 18th Feb 21
Cannabis, Alternative Agra, Mushrooms, and Cryptos – Everything ALT is HOT - 18th Feb 21
Crypto Mining Craze, How We Mined 6 Bitcoins with a PS4 Gaming Console - 18th Feb 21
Stock Market Trend Forecasts Analysis Review - 17th Feb 21
Vaccine Nationalism Is a Multilateral, Neocolonial Failure - 17th Feb 21
First year of a Stocks bull market, or End of a Bubble? - 17th Feb 21
5 Reasons Why People Prefer to Trade Options Over Stocks - 17th Feb 21
The Gold & Gold Stock Corrections Are Normal - 17th Feb 21
WARNING Oculus Quest 2 Update v25 BROKE My VR Headset! - 17th Feb 21
UK Covid-19 Parks PACKED During Lockdown Despite "Stay at Home" Message - Endcliffe Park Sheffield - 17th Feb 21
How to Invest in ETFs in the UK - 17th Feb 21
Real Reason Why Black and Asian Ethnic minorities are NOT Getting Vaccinated - NHS Covid-19 Vaccinations - 16th Feb 21
Gold / Silver: What This "Large Non-Confirmation" May Mean - 16th Feb 21
Major Optimism for Platinum, Silver, and Copper - 16th Feb 21
S&P 500 Correction Looming, Just as in Gold – Or Not? - 16th Feb 21
Stock Market Last pull-back before intermediate top? - 16th Feb 21
GAMESTOP MANIA BUBBLE BURSTS! Investing Newbs Pump and Dump Roller coaster Ride - 16th Feb 21
Thinking About Starting to Trade This Year? Here Are Some Things to Keep in Mind - 16th Feb 21
US House Prices Real Estate Trend Forecast Review - 15th Feb 21
Will Tesla Charge Gold With Energy? - 15th Feb 21
Feeling the Growing Heat and Tensions in Stocks? - 15th Feb 21
Morgan Stanley Warns Gasoline Industry Is About to Become Totally Worthless - 15th Feb 21
Debts Lift Gold - Precious Metal Prices Will Rise on a Deluge of Red Ink - 15th Feb 21
Platinum Begins Big Breakout Rally - 15th Feb 21
How to Change Car Battery Without Losing Power, Memory, Radio Code Settings - 15th Feb 21
Five reasons why a financial advisor can make a big difference to your small business - 15th Feb 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Viable Ways to Finance a Used Car

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

By: Steve_Barker


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 - 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

6 Critical Money Making Rules