How to Choose the Best Auto Loan Lender for a Used Car
When choosing a lender, get quotes from at least three companies and pay attention to the following factors.
A 72-month loan was the most common term for a used car loan in the first quarter of 2022.
Lower monthly payments are appealing, but taking out a loan based on this metric alone may not be a great decision. Check available terms and consider how the loan’s duration impacts the overall cost.
In general, longer terms reduce monthly expenses but accrue more interest. In contrast, shorter terms increase monthly costs, but you may pay lower interest.
The APR is the interest you pay during your loan. Higher APRs result in more interest and higher monthly costs and vice versa.
Make sure lenders give you quotes for the total amount, not just monthly payments. That way, you’ll get a better understanding of the funds you need to return.
Compare the Best Used-Car Loan Rates
Here’s a useful comparison table:
|PenFed Credit Union
|Consumer Credit Union
|Bank of America
Used Car vs. New Car Rates
Here are the average interest rates for a used car and new car loans:
Used Auto Loans Rates by Credit Score
The average APR varies by credit score:
||APR for Used Car
||APR for New Car
Every bank has special approval requirements. However, most institutions focus on your credit history and debt-to-income ratio.
The former might be the most important determinant of your rates. The better your credit rating, the more competitive the quotes.
Documents Required – Checklist
- Proof of identity
- Proof of income
- Proof of residence
- Vehicle documentation
- Proof of insurance
What Is the Difference Between an Auto Loan and a Personal Loan?
Many people conflate auto and personal loans, but there are major differences between the two. Primarily, you can use a personal loan to finance almost anything, whereas auto loans specifically finance a used or new car purchase. Also, car loans are secured by a vehicle, which is why they typically have lower rates than personal loans.
Therefore, use auto loans when buying a new or used car. Some dealerships and lenders may provide financing without a down payment, but you can receive lower rates by making one.
Additionally, you might qualify for new or used car refinance loans if you make timely loan payments during a specific period. Lenders may also offer them if you’ve improved your credit score.
Personal loans work best if you’re a borrower who doesn’t want to make a down payment on their car. You prefer unsecured funds and don’t mind higher interest rates when purchasing a vehicle.
Unlike auto loans, personal loans might not come with a lien on the car. In other words, you retain the title, allowing you to sell the vehicle before paying off your loan.
Find the Best Used Car Loan Rates With Lendstart
Our platform can help you choose the best offer. We offer in-depth information about reputable institutions to give you a better understanding of their lending process. Plus, we have an intuitive car loan calculator that lets you compare rates and determine the best used car loan interest rates within seconds.