When we think about getting a car loan, most of us probably associate this with buying a brand new car. However, many car purchases across Canada are for used vehicles and loans are available for these cars too.
There are a few considerations to make when thinking about getting vehicle financing. Some of these may apply regardless of whether the car you are buying is new or used. However, there are some that are more specific to purchasing a previously-owned vehicle. Here are some steps to take when deciding on the right financing for a used car.
Read more: New Car Loans vs. Used Car Loans: What's The Right Decision For Me?
3 steps to getting a loan for a used car
1. Assessing your budget
Even before you set foot in a car dealership or apply for financing, you will want to take a closer look at how much you will need to budget in order to afford your vehicle. Like buying a new car, you need to take into account the cost of not only the down payment, but also the monthly loan payments and even the insurance, repairs, and so on.
2. Deciding your term
After you have developed your budgeting plan, you can take it a step further and pinpoint how many months will it take you to pay for the car. The duration of the loan is a key factor to be aware of before you sign anything. This is called the loan term and it usually lasts anywhere from 24 months to 84 months. The Canada Drives Car Loan Calculator is a simple but incredibly useful tool that can help you understand your monthly car payment and loan term in seconds.
Go to the Car Loan Calculator.
3. Applying for loans
When it comes time to actually applying for the used car loan, deciding where to apply for a car loan can seem like a daunting process, especially if you don’t know where to look. Many people solely look to car dealerships and financial institutions for auto loans. However, it can be difficult to get approved by a dealership or bank if you're credit is low. Furthermore, it can be a time-consuming process that requires several appointments to finalize.
Alternatively, you can work with an online vehicle retailer like Canada Drives, which has spent the past decade building a network of prime and subprime lending partners to help all Canadians get the car and financing they need. And the best part is, you can do it all from the comfort of home!
What to watch out for when buying a used car
Affordability
If you already have a vehicle in mind and are aware of what it costs, you will be able to identify how much to budget and be ahead of the game a bit. During this step, you will want to also keep in mind how much you can actually afford and not choose a vehicle that is valued too high. Failure to make payments regularly and on time can be potentially dangerous to your credit rating and finances in general.
As a first step, many shoppers choose to get pre-approved as it helps them understand how much they can afford before they even start looking at vehicles. This type of credit check does not lower your credit score.
Get pre-approved online for free here.
Market value
It is also important to take note of the book (or listed) value of the used vehicle you are considering. This is critical as you do not want to end up paying more for the car than you have to. The internet is a great source of information, helping new and used car buyers gain a greater understanding of the value of a specific car. The main information you will need to know to help determine this value includes the vehicle’s make, model, year, mileage, and the overall condition of the vehicle itself.
All car shoppers should bookmark Canadian Blackbook as it will provide the average asking price of any car you have your eye on.
Vehicle history report
One of the big concerns about buying a used car is not knowing its history. But thanks to services like CARFAX, you can check any vehicle’s full history online with just a few clicks of your mouse or taps of your finger. Some private sellers will have the CARFAX report ready for the potential buyer to inspect, but don't count on it. Many dealerships will have one in an effort to be completely transparent. Always insist on looking at the CARFAX report before you make any big decision about a used car.
Private sale vs. dealership
You also need to consider if you’ll buy a car from a dealership or from a private seller. There can be advantages and disadvantages to both approaches, and you should be aware of these before moving forward.
With a private sale, you may get a low price on the car, but you should enter into this process with caution. For example, while a dealership will complete a proper vehicle inspection and professional reconditioning, you won't get the same assurances of reliability in a private sale.
On the other hand, while you can be more certain that you're getting a reliable vehicle from a dealership, you might pay more in "dealer fees".
And that's where Canada Drives comes in.
As a 100% online vehicle retailer, Canada Drives has fewer brick-and-mortar stores. It means we have less overhead and those savings get passed on to our customers. We also provide free CARFAX reports, 150-point inspection reports, soon-as-same-day delivery, and a 7-day Love It Or Return It Guarantee.
If you are in the market for a used car, visit Canada Drives right now and access hundreds of certified used vehicles online. Get started!
