An important gear in the process of owning a used car in Calgary is planning the financing options. Most buyers forget to accord due importance to this aspect of the used car buying process in their excitement for the shopping experience. As per the data released by the credit bureau Experian, close to 55% of used car buyers take out loans to finance their purchase. But did you know that while buying a new-to-you car is saving you thousands of dollars compared to a brand new one, financing a used car is more expensive? The crucial thing to remember is that having relevant knowledge about the entire process will get you started on the right track for obtaining the best deals.
Here we have compiled a step-by-step procedure for financing used cars in Calgary to help you along the process.
The 8-Step Guide To Financing Used Cars
1. Check Your Credit Score
A credit score is a number between 300 and 850, indicating your creditworthiness or your capability to repay a loan. It helps lenders get a snapshot of your credit history to decide if you are eligible for the loan. Several credit bureaus, such as Equifax, Experian and TransUnion, will calculate your credit score against a fee.
An important aspect of your credit report is your debt-to-income ratio, indicating the amount of credit you use against your stated income.
2. Research The Various Lenders
When buying a used car from a dealership, they will offer you the financing as well. However, to motivate them into offering you great deals, you must have pre-approved offers from private lenders that they have to compete against.
Your options for lenders outside the dealership for used-cars range from national banks, community banks and online banks to credit unions and financial institutions. Remember to get a vehicle history report that most lenders will offer as an incentive to use their loan offers.
3. Apply For The Loan And Get Offers
Once you have researched the various lending options available to you, it is time to apply for a used-car loan. Many institutions have a completely online application procedure with e-signatures, while others might require paper applications and traditional signatures.
The application form asks for a lot of personal information such as your social insurance number, bank account and credit card details. This helps the lender obtain your credit score and get a complete picture of your financial stability before making the loan offer.
4. Compare The Offers
While making your choice among the various financing offers now available to you, it is crucial to not limit your focus to just the monthly payment and interest rates. You must find out how much the car is costing you after financing, including any fees.
Auto loan calculators are a good method of ascertaining the total cost of the car and for comparing offers.
5. Shop With Confidence
Entering a used-car dealership, armed with information and reviews on used-car rankings and a loan offer, will help you interact with confidence. Ask for the vehicle history report that tells you if the car has been in an accident or has title issues. Resistance from the dealer in obtaining this report should be seen as a red flag.
6. Stay Alert Of Red Flags
- Common car-loan red flags include:
- Offers too-good-to-be-true.
- Long durations of repayment exceeding 5 years.
- Rolling the fees and charges into financing.
- Yo-yo financing where your loan falls through and is renewed at higher rates.
7. Final Steps
These include:
- Getting the right car insurance.
- Make timely monthly payments.
- Check for refinancing deals to lower the current interest rate.
8. Prepare For A Future Financial Crisis
Life happens and you might be presented with a situation where you have to miss a payment or refinance for a longer duration. Know your options if these situations should occur in the future.
Gathering all the relevant facts and knowledge before venturing into used-car financing will lower your risks and help you get the best deal on the car of your choice. At Double L Motor, we own a large collection of certified used cars in Calgary with great financing offers for you to choose from.