Getting a used car loan during a credit crisis is becoming more difficult. Used to, getting a loan for a used car was rather simple. If you had good credit there was no problem and if you had marginal credit it was still very easy to get a car loan. Even people with bad and poor credit were able to qualify for a car loan with certain lenders. But during a credit crisis these loans are much harder to find. Banks and financial institutions are much more strict on the rules and guidelines when it comes to approving someone for a loan for a used car during a credit crisis. Many lenders will simply shut their doors on people with below average or poor credit.
Buyers with credit histories showing the slightest bad decision are being denied for loans when before a one-time bad deal would not be considered for denial of a loan. Most of the time an automotive loan would be denied because of habitual bad credit decisions, not one-time offenses.
The U.S. auto dealership group, AutoNation Inc., says that approvals for car loans have gone from 90 percent last year to a current 60 percent. Terms for loan approval are going to be much more strict for marginal and even good credit scores during a credit crisis. Some looking for a used car loan are going to have a down payment of 20% to 30% rather than the 0-10% of the recent past. Some people who would have been approved under normal circumstances won’t be approved during a credit crisis. And those who do get loan approval are either getting loan payments for more than they can afford or are not getting approved for as much as they would like to have. Interest rates are also higher than expected, even for those with good credit.
Another major concern when it comes to getting a used car loan is the loan value of the car. Many car buyers opt for very long repayment plans when buying a car, which lowers the monthly payment. But the problem occurs when trying to sell the vehicle. That long repayment plan has made the pay-off of the car more than what the actual value of the car is. You will either have to try and sell the vehicle for that price or continue paying on a car that is no longer yours.
When wanting to get a used car loan during a credit crisis, good credit is the number one priority. Without a really good credit score, the chances of getting a loan with low payments and a low down payment are almost impossible. Making sure you have enough income coming in to cover current bills and other expenses on top of your car loan payment is another important issue to consider. Don’t take on more debt than you can afford to pay each month.
Before applying to get a car loan, take a look at your credit score to see where you stand. The lower your score, the less likely you will be able to get a loan. If your credit score is less than stellar, try saving up a good amount of cash to be used as a down payment. Putting a large amount down will sometimes help get approval since the loan amount can be smaller. A good way to get cash is to sell your current car to a private party and use that money as down payment on another car. If your current car can be sold for $10,000, use that money for a large down payment or as a safety net if you get approved for some, but not all, of the price of the car you want. You can then use the cash to pay the difference.
During a credit crisis, having great credit is the best way to get loan approval, but there are alternatives for even those with poor credit. Many lenders will work with you to come up with a solution for your used car purchase.
There are many advantages in buying a used car, especially for people who have just begun working. Young professionals, particularly those who have only recently entered the work place, are often not yet in a position to choose a brand new car. Choosing a used car instead often has its own set of benefits. Here are reasons why a used car suits a young professional best:The price makes them user-friendlyUsed cars are significantly much more affordable than brand new units. Currently, the average price that new car buyers pay for a unit is around $25,500. For used cars, the average amount is just around $8,200. Putting a downpayment on a new car will still be a significant cost to the buyer.At today’s current prices, the spread between the price of a new car and a used one is getting wider. That can only mean one thing — that buyers are getting really great deals, provided they know how to choose. For a young professional, the low prices of used cars is well-suited to their as-yet limited budget.Depreciation can be avoidedDriving a brand new car from the dealer’s lot will significantly reduce its resale or market value. That’s the price any new car buyer will have to pay for depreciation, which could range from 20% to 30% of the value of the car. Depreciation is usually computed during the first two-year ownership of a new car.With a used car, young professionals do not have to concern themselves with paying for depreciation. That cost will already have been shouldered by the first owner. So what they pay for is just the market value of the car, avoiding the costs associated with the unavoidable depreciation.Insurance is cheaperIn general, insurance for used cars costs less than that charged for brand new cars. Young professionals looking to save money will find that they do not have to scrimp on coverage just because they’re buying a used vehicle.Brand is not really a concernMost young professionals in the market for used cars have this belief that typically high-end cars such as Mercedes Benz and Lexus are just out of their league. Not so. With certification programs made available for many luxury brands, more and more people find it easier to own the car of their dreams, albeit used ones.Young professionals will find that these used cars are well-suited for their career and new lifestyle, particularly because luxury brands have a reputation not just for their looks but also for their function. The price is typically higher than what a regular used car will fetch but the assurance of quality plus the extras in terms of coverage will be well worth it.
New car sales figures are reflecting the global economic situation, not surprisingly, figures from the automotive industry indicate that used cars sales are more common, with three times as many people buying used cars rather than new. For many people, in need of a vehicle for work purposes, new cars are just too expensive and financially risky these days when job security is a thing of the past, also, many people have had to downgrade their vehicles for the same reasons, so the used car market has some great deals on high quality, pre-loved cars available. We all would like to have a brand new car, however if you buy a used car now, and can wait a couple of years, with the money you will have saved, you could then look at new cars and possibly be upgrading on the type of car you originally desired. The depreciation in new vehicles is at it’s greatest during the first two years, and you could purchase a two year old BMW for the price of a new Camry.You can find well looked after two year old used cars, having done less than 30,000 km that look brand new, and have way more features than you could afford in a brand new car. You definitely want to have the basics like dual airbags and anti-lock brakes not only because of safety but also due to the fact that it will save you on your car insurance. Some vehicles even have side and rear airbags.When buying a used car have a good look at the wear and tear of the interior. It is unfortunately all too common, that people who do not look after the interior of their car, including keeping the exterior protected, also give little thought to looking after the vehicle mechanically. If you are looking at a vehicle with torn seats, stained carpets and the like, give it a miss, keep on looking.Also important, the tire tread wear. Be on the look-out for worn tires, including uneven tread wear indicating an wheel alignment problem. When you road test the vehicle take your hands off the wheel for a second and see if the vehicle drifts. Check and make sure that there is a spare and that it is in good condition.Damaged paint work is easy to spot with a close inspection. If body panels appear a bit out of alignment, there is a good chance it has had parts replaced, most probably due to some accident. If any doors are difficult to close, the vehicle may have been in some major accident. Have a mechanic look the vehicle over, checking the fluids, lights, belts, charging system, and air conditioning system, also get them put it on a lift and check the underneath of the vehicle for any frame damage, or damage repair.Also always keep in mind, it the price is too good to be true, there is probably a catch in there somewhere. Best to walk away and continue your search elsewhere before buying a used car.
We are back with part three of the series, Questions to Ask When Buying a Used Car. In part two, we covered the questions about the drive train, service history, and accident history. In this part we are getting right down into the finer details of what questions to ask when you are interviewing used car sellers over the phone before you travel out to see their car for sale.
It’s worthwhile to ask the seller how much rust their car has. Let’s talk about rust. Even a car that is only a few years old can have a little rusty spot or two. An older automobile that is for example 10 or 15 years old can potentially have anywhere between no rust at all and a serious cancer condition. No one likes a rusty car, but it’s obvious that the less there is the better.
It is always interesting to ask about rust over the phone with a used car because everyone has a different perception about how much rust their car has. It is difficult to quantify, and it’s all relative. Some people have told me that their car is very rusty, and when I went to see it I found that it had almost no rust at all by my standards! The opposite scenario is more typical.
The answers to the rust question are often misleading, but ask anyway and write down their responses. If you do go out to look at the car later, you can learn more about the seller by referring to your notes. Speaking of notes, it’s a really good idea to take careful notes when car shopping over the phone. It is possible to gather so much information in a relatively short period of time, that if you don’t record what you’ve learned in a systematic way, you will end up with confusing, incomplete, or just downright incorrect data.
I like to take a blank sheet of paper and begin each entry with the year, make, model, price, and phone number from the ad while I am dialing. That means I am writing about that vehicle before I even have the person on the line. From there I just add the details and then make a line across and call another one. After several calls have been made, it’s easy to look back and see which ones look the best. Take your notes with you on your actual visit and compare what the seller has told you with your sheet to see if they were being straight with you over the phone.
Ask the sellers if there are any problems that they are aware of with their car? Again make notes on their answers. It’s okay to spend a little time on this one. You can subtly remind them that it’s important to be truthful here by telling them what you want the car for and why you are concerned about its future reliability. Ask them if this car needs anything in order to be safe to drive right now, in the near future, and in the distant future.
You should always ask them what they have done in terms of maintenance or repairs to the car lately, and if they have the receipts to prove the work. If they have no receipts, then be very skeptical of the maintenance history. No service records usually mean incomplete maintenance which spells trouble for any used vehicle later in life.
That wraps up part three. In part four, I’ll cover some more specifics including expensive-to-replace critical-car-components! Thanks for reading.
Think of purchasing a second hand vehicle as a game of poker, the seller is your “enemy” he may be bluffing out he may not, simply just as you’d at a poker game room in a casino you’ve to try to scan the dealer as if you would in a poker game room in a gambling casino.All of the time think to hold your eyeballs and ears wide-open, when speaking to someone regarding a second hand car. Make certain to ask tons of questions.In a gambling casino you’re risking your money, in desires of getting a jumbo refund, simply when purchasing a second hand vehicle you just need to have your moneys worth, you want a vehicle that would be strong and reliable. You don’t want a car that will not get going on cold days or that stands till its been running for a 30 minutes.Make sure to check out the undercarriage and below the hood for corrosion. To a car rust is like cancer. When rust is got it will spread unless it is cut off or replaced. under the vehicle and inside the motor compartment you’ll see a few corrosion it’s absolutely normal, but you need it to be only superficial corrosion. It means if you take a wire brush to the rusty field you’ll brush aside the corrosion and reach clean metal.Next do remember to look into the body of the vehicle, for wavings and any bubbling in the painting, this will show that the car has been in an accident or some rust was wrongly fixed. It is not rare for somebody selling a used car to have corrosiony places sandpapered down and coloured over to give the car a cool appearance, simply what would turn up is after a few months the paint would begin to blister cause the metal gets to corrode over again.Then, take a look at the engine and mechanic parts below the hood of the vehicle. The engine should be more or less clean from motor oil. if you see large buildups of oil in a field then chances are a head gasket seal will need to be replaced because of an oil leakage.Each electrical and rubber part had better be checked out for fissures. fissures in rubber parts means that the rubber is stale and ran dry and would probably want to be replaced sooner or later.Make sure to ask the owner of the car if he has every receipt for any work that has been made to the car.Another main piece of advice is to make sure to take the car for a good test drive. Don’t be timid and drive the car a bit hard with the owner with you in the vehicle, they should understand, if they object so perhaps there’s something with the car they’re attempting to hide out and you should pass on to some other car.Most people would tell you that buying a used car is a risk but if you take a skilled serious look at every vehicle, and not get unprompted to buy, you can put away any hazard and provide yourself a jackpot of a car.
In our current economic situation, it is already a good decision if you buy yourself a used car rather than buy a new one. This is not just according to the economy, too. Even if you’re not tight on your budget and can afford to buy a new car, you will find that most used cars are better than the new ones. This is because used cars have undergone repairs and improvements that they can perform better than the new ones. Searching For the Right Used Car: The first step you take in buying a used car is planning on what kind of car to buy. People usually already have an idea of what they want their car to be. But it would also be wise to expand your options to other types of cars. Focus on how you want the car to be and from there think of the different kinds of cars that would fit your description. Start with the general descriptions of the car like the size, the number of people it can hold, even the color if you want. Then you look up on the kinds of cars that fit well with you general descriptions. From the general outlook, you can then go deeper into specific details – engine, horsepower, hybrid, etc. Find out the details about the cars on your list then hold onto the ones that fit your dream car the most. You should also take a good look at the history of the used cars you’ve found when car shopping. Money Talks: The next thing to think about after you’ve settled on your list of potential used cars is financing it. Make sure you can afford to buy the used cars on your list. If one of them goes beyond your budget then you’ll have to let go of it. There are three kinds of payments that you have to consider when you buy a used car: the monthly payment, down payment, and the purchase price. In choosing a car, you’ll have to consider these three to not make a mess of financing for your car each month. Consider how much you’re willing to pay as down payment and if you can meet the monthly installments. Testing Before Closing the Deal: Before you say yes to a deal, it’s recommended that you study the chosen car’s history again. Inquire about the repairs and improvements made on the used car. Take it for a test drive, too, and take a feel on how compatible the car is with you. Comfort is part of what you should look for in a car. After testing it, and after considering its history and the price, you can go on with the negotiations and finally close the deal. Don’t forget to go through the insurance process for your car. Dealerships usually have the finance and insurance process.You might not have the newest car on the block. But buying a used car gives you the knowledge that you’ve somehow made a great deal and have efficiently saved some money.
Many people are attracted to used cars not just for their cheaper prices but also because of the value they bring. Cars are materials of utility, in that they are bought for their function, although many car buyers also purchase their vehicles for the prestige. But is buying a used car really worth it or is it just another over-hyped marketing ploy to encourage new buyers to spend more money than they ought to on a secondhand vehicle? Here are important considerations that will help you determine if buying that used car is indeed worth the time, effort and money:You get all the information you need about the vehicleWhen you buy a used car, you become the second, third, fourth or even fifth owner of the vehicle. Before you is at least one other user/owner/driver who used the car. Your concern here is: how well did the last owner/s take care of the car, how often and where did they use it? Did the car often carry heavy loads? Was it used primarily to drive on city roads? Did the last owner/s take good care of its interior? Did the car undergo regular checkups? Was it involved in an accident, traffic violation or even crime? Buying a used car is only worth it if you have access to its history and if you can verify the information you obtain. If you can’t, you run the risk of buying a used car that may cost more to use in the long run.You don’t have to perform expensive repairs on the carMost used cars out of a lot are sold on an ‘as is where is’ basis. That is, you basically get what you see. A used car is only worth your money when and if you can purchase it without having to spend more money on repairs. Of course, you cannot expect a used car to perform as well as a brand new car but you should also aim to get your money’s worth. Otherwise, the purchase is just not worth it.If the expense for repairs on the used car is over 50% of its total cost, it may not be worth the price. Unless of course, you don’t mind the extra expense.
You get sufficient insurance coverage for the vehicleConsider yourself lucky if you can find a late model car that’s still covered by the usual two- or three-year manufacturer’s warranty. That should give you enough coverage, at least temporarily. If the manufacturer’s warranty has already expired, you will have to purchase an extended warranty on the vehicle to ensure its coverage. Otherwise, you could be slapped by unnecessary expense in case of a mishap or accident.You fully understand the financial aspects of your purchaseWhen you buy a used car, you should have complete understanding of what you’re getting into, especially if the purchase is financed. A loan, for example, means you’ll have to pay for interest, which in the end means you will pay more than the asking price for the car. Carefully consider your ability to pay and whether or not the car is worth the total amount you will eventually spend.
Buy new or used? That’s probably the first question that crosses a potential car buyer’s mind. When money’s tight and the economy forces everyone to rethink both major and minor decisions, putting money on a significant purchase such as a car should be considered carefully. If you still cannot decideYou avoid paying for the depreciationDepreciation is a major issue when buying new cars. A brand new vehicle will lose a significant percentage of its market value the moment you drive it off the retailer’s lot. From there, it will continue to lose value for about three years. For most first-time owners of new cars, the drop in value can be surprising in an unpleasant way. Try selling a one-year-old car and you’ll see what a huge chunk of value gets shaved off.If you wish to avoid paying for depreciation, a used car is far better than a new car in this department. You leave it to the original owner to shoulder depreciation and you get to enjoy the use of the vehicle thereafter.You can buy excellent cars cheaper than $10,000Ten thousand dollars will probably buy you a brand new car — a nice, small, compact car that even your kid brother or young son could drive with little effort. Great if you’re looking for a car this small and if you don’t mind the most basic (read: incomplete) features. If you choose to buy used, however, there’s no need to spend thousands of dollars on a purchase. If budget is a big consideration, then a used car will be a better choice than a new car. As long as you choose wisely, a new car can give you so much more in terms of savings over its usable years.You have a choice in terms of brand, make and modelHundreds of thousands of cars enter the used car market each year. That should give you a few hundred choices that will fit your needs and whatever specifications you might require. The number of cars made available through dealerships, auctions and private sellers also give you a wide range of choices in terms of mileage. It’s even possible you’ll find a low-mileage car at a very affordable price.You can find a used car that has great investment value AND excellent working featuresCars are not exactly investments unless you count their contribution to a business. In most cases, the purchase of a car if often chalked up as expense. There are also expenses that are often associated with brand new cars that may not be an issue with used cars. Used cars, for example, do not require the high insurance premium that you’ll have to pay for if you choose a new car. That’s a significant amount of savings in terms of dollars every year.You get the car of your dreams at huge savingsAnother reason why a used car is better than a new car is that it gives you access to some high-end cars without requiring you to spend a lot. If brand names such as Mercedes, Audi and Chevrolet seem the epitome of hard-to-afford cars, you can still own one (or a few) of these cars without having a fat bank account.