When you’re looking for a used car, there are a lot of different factors that come into play. But if you’ve never bought or leased a car before, looking for a loan can be very stressful. Without the knowledge or experience, you could be at risk of missing the red flags and getting a bad loan. Many will just go with the loan they get from a dealership, which is usually not the best. Thankfully, that’s where we come in to help. Read on below for some very helpful tips for finding the best used auto loans.

1. Determine How Much of a Loan You’ll Need

Before you start looking for the best used auto loans, you should at least have some idea of how much of a loan you’ll need. Look at resources such as Kelley Blue Book to find the average costs of the type of used car you want. That will give you a good price range, which makes it easier to figure out the loan amount.

Try to save up for the down payment. If you don’t have much right now, consider putting off getting a used car for a bit to save up. Typically, your down payment should be for at least 20 percent of the total price of the car. The more you’re able to put down, the better your used car loan will be. A down payment could save you hundreds or even thousands of dollars over time.

Decide how much money you’ll need in financing and how long you plan to finance the used car. Keep in mind that it’s usually better to choose a shorter term. Forty-eight months is typically a recommended period of time. The faster you pay off the loan, the less interest you’ll be charged. While a longer term means lower monthly payments, it also means paying more if you stretch it out for a few more years. A car, especially a used car, isn’t an investment, so the interest should be as low as possible. And the interest on some used auto loans can be higher than on other auto loans.

Get this into your head: you should refrain from opting for a high amount that may not be able to pay off. This may invite unnecessary headaches into your life in the form of vehicle repossession, which happens when you fail to pay the installments of the loan. This leads the lender to take away your car. However, the lender needs to be civil during this process, the failure of which may enable you to approach him with the help of your Massachusetts Repossession Lawyer or wherever you are located.

But how to know what amount of loan could be the best suited for your needs? Simple, make use of a loan calculator, which can also help you to check out what your ideal monthly payment will be. At Central Willamette Credit Union, we have an Auto Loan Calculator on our website. This is a very helpful tool for figuring out the best-used auto loans.

2. Check Your Credit Standing

Your credit is another thing to take care of before you actually start shopping for loans. Sometimes a dealership advertises a great deal without specifying that it’s actually just for people with excellent credit. If you have a lower credit score, it doesn’t mean you won’t get a loan. But the better your credit score, the greater your odds of getting the best-used auto loan. Dealerships often take help from third-party agencies to gain special finance auto leads, so that could mean that customers with a lower credit score can also purchase cars in such shops.

A credit score of 760 or above, which is in the “excellent” range, will get the lowest interest rates. Someone with a credit score under 700, however, will be charged more. What if your credit score is too low? There are some steps you can take to improve it. And don’t worry, many of them won’t take longer than a couple of months.

If you have major or minor debts, try to repay as many of them as possible. If you can’t repay them at the moment, try not to rack up any more debt and make your important payments on time. If you suspect something is amiss, check your credit report for any errors. And if there are any, get them fixed as soon as possible. You can also inquire about a credit limit increase or goodwill adjustment.

3. Get Pre-Approved for an Auto Loan

Pre-approval is often recommended as a step to take before shopping around. When you already know you’re pre-approved, you won’t have to negotiate certain details of the loan. Instead, you can focus on getting a lower price for the car and lower interest rates.

Being pre-approved for a loan also allows you to shop as if you are a cash buyer. This is incredibly beneficial for getting the best deal.

4. Shop Around

This is incredibly important for any kind of loan. And the best used auto loan is no exception. Shopping around and comparing offers can save you a lot of money, both up-front and over the lifetime of the loan. One benefit of doing this is that you’ll be able to use other offers as leverage. They will make it easier to get a better offer from lenders.

It’s very important, however, that you set aside a two-week period, at most, to do this. That way, shopping around for the best used auto loan won’t have much, if any, negative effect on your credit.

Before you start this two-week (or less) process, see if you can find out the average loan rates for your area. Having these numbers in mind will make it easier to tell whether an offer is actually good or not.

One shopping around method some find helpful is to look at different types of lenders. This means different types of financial institutions as well as different online lenders. Whether you’re considering Toyota financing (or similar options for other types of cars) from a dealership or a bank, exploring your options is key.

Be sure to ask about any fees so you’re not blindsided by extra charges later. Trust your instincts. If a lender seems sketchy or anything on a contract seems odd or suspicious, it’s likely in your best interest not to accept that offer.

5. Consider a Used Auto Loan from a Credit Union

Finally, keep in mind that a credit union provides many advantages to get you the best used auto loans. To start, because credit unions are smaller and more focused on personalized customer service, you’ll likely have a better chance of being pre-approved. Credit unions usually don’t have a minimum loan amount as larger financial institutions do. Also, because credit unions are not-for-profit, they often have better interest rates than for-profit institutions. This makes it a better option for anyone with a lower credit score or who hasn’t built up much credit yet.

You can find out more information about Central Willamette Credit Union on our website. Our website shows all of our advantages, in addition to our best used auto loans. And you can apply for one of our loans online. If you’re not already a member, you can apply to open an account on our website as well.