A used car loan is given to those who wish to purchase a car that has had a previous owner. The car may be purchased from the owner or used car lot. Used cars are often cheaper than new cars and fit into peoples budgets. There are a few stipulations to qualifying for a used car loan. The first is that many lenders require the car to first pass an inspection before granting the loan. This is to prevent a person from buying a lemon or a car that does not function properly. There are laws that protect people from such vehicles. It is illegal to advertise a car under false pretenses. If the car, for example, has transmission problems, buyers must be informed so that the decision to purchase the car is based on repairing the car. The title to the vehicle must be in the sellers name, and the car cannot have money owned on it unless the new owner will be taking over payments. Used Car versus New Car A used car loan is measured against the same standards as a new car loan. The person must have steady employment, a reasonably clean credit report, although there are lenders who are willing to grant loans to those who have filed bankruptcy, or who have consolidated loans, a valid drivers license, and proof of car insurance. A used car loan will not have to for as much as a new car loan and the interest rate is usually lower. There are two, four, or five years loans to choose from. Once the loan has been granted, repayment will begin within two months. Used car loan repayment It is very important to make regular payments on a used car loan. If two or more payments are missed, the lender has the right to repossess the car and sell it to try to make the money back on the loan. Repossession can take a few months, but the damage to ones credit report is immediate. Many lenders will try to work out a different payment that will extend the life of the loan and may raise the interest rate, but the new payment will be lower. This can help a person keep their car. For those with bad credit, a used car loan can actually help improve the score over time. Since these loans are usually smaller than a mortgage or new car loan, paying if off is not a huge problem. Once the loan has been repaid, the person will be in good standing with the lender in case future loans are needed. Their credit will improve which will help if a person decides to apply for a new loan or a credit card. Used car loans are used for many purposes. Most people need a car to get from work or school. These loans are given out each day to those who qualify so that they can buy a car to improve their lives You may freely reprint this article provided the following author's biography (including the live URL link) remains intact: About The Author |
