Looking to buy a used vehicle, but wondering, “Can you finance a used car?” In most cases, the simple answer is yes. Still, there is a bit more to financing a used vehicle than you might realize.
If you’re looking to learn how to finance a used car, here’s a simple breakdown of everything you need to know.
Can You Finance a Used Car?
Asking, “Can you finance a used car,” is a simple question, and in almost every case you certainly can. This is likely true whether you’re purchasing the car from a dealer, a Carmax, a previous owner, or even at auction.
The real question you’re most likely to face is, “Should I finance a used car?”
Used Means Higher Interest Rates
It’s harder to predict how much a used car will be worth when it’s resold. When you’re purchasing a brand new car, it’s much easier to make an educated guess at how much it will depreciate as you own it.
Because of this, financing a used car often comes with slightly higher interest rates than financing a brand new one.
Most lenders try and make up for the unpredictability of a used vehicle purchase by raising interest rates. That way, if something should go wrong with the car, say a mechanical issue, you (as the buyer) back out, or the car seriously depreciates in value, they are protected from major losses.
Financing a Used Car Can Mean Higher Insurance Rates
Unlike brand new vehicles, there are miles on a used car. Sometimes many miles. Newer vehicles also tend to come with updated safety features, brand new parts, and they’re less likely to breakdown.
For insurance companies, this means a used vehicle will likely cost them more to insure. While there are some serious pros to buying used instead of new, keep in mind that your insurance rates could be higher.
What does this have to do with financing your used vehicle?
Well, if you choose to finance your used car, you’ll also have to pay slightly more for insurance as you will be required to buy additional insurance. This additional insurance is called comprehensive insurance.
Basically, it means that you’re insuring the lender if any damages happen to the car.
When you buy a car in full, upfront, you just have to pay for liability insurance.
Pros of Financing a Used Car
Generally speaking, if you’re buying a used car, it’s probably wise to pay in cash where possible. However, if you struggle with low credit, it can be challenging to pay upfront for a used vehicle.
This is where financing a used car may be a good option. Before deciding whether it’s worth your investment, speak with different lenders and see what kind of loan you qualify for.
Purchase A Quality Used Car
Can you finance a used car? The answer is yes. But for guidance on what’s possible for you, it’s helpful to speak with an expert.
Contact our helpful team at Terry Auto Outlet today and find out what financing options are available to you.