When you are considering purchasing a used auto car, you have to fill out a credit application to make sure you have the means to finance your new purchase. Buying a car, for most people, represents the second-largest they ever make. This can be an overwhelming and confusing process if you have never done this in the past. Use the following tips to ensure that your credit application is approved and that you receive the financing that you need to purchase a used car.
Determine Your Budget
You need to determine what you can realistically afford. You should take the time to consider all of the costs of used car ownership, including repairs, insurance, maintenance, registration fees and fuel. It is also important to consider whether or not you will have to pay a significant amount for sales tax. When you calculate these costs, it will help you to determine what you can afford for your used automobile. Additionally, you will know how much financing you should apply for on your credit application.
Factors that will Impact your Payments and Interest Rate
There are a number of factors that can impact the interest rate, as well as the monthly payments that you will have to pay, which include:
- Your current credit rating: The lender that you choose will take into consideration your credit rating, the history of your payments and the amount of debt that you currently have.
- Your current income: You need to have a stable source of income that is enough to pay both your current debts and your potential used automobile payment. This will help you to qualify for a lower interest rate.
- The type of vehicle you want to purchase: The interest rates for new cars are typically less than used cars and you should keep in mind that cars that are more than seven years old may not be able to qualify for lender financing.
- The term of the loan on your credit application: When you are financing for a longer term, it will reduce your payment which may add to the monthly flow of cash, but actually cost you more money over the entire life of your loan.
Your credit application should be filled out completely and with as much current information as you have. This will help your lender to approve the loan much faster. Purchasing a used automobile will help you get where you need to go, in most cases for a lower cost than purchasing a new vehicle. Understanding what is considered when trying to finance your vehicle will help you make an educated decision regarding the vehicle that you ultimately purchase.