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How to Finance a Used Car Purchase

Did you know that the average cost of a new car has creeped past $20,000 in recent years? And that’s just the average price, which means that many models go for far more. This gradual climb has driven up the cost of used cars as well, and chances are you will need to finance your next used car purchase.

As with any major financial decision, the more you know about the car financing process, the better off you will be. Whether you are looking for a pre-owned car deal near Tappan, NY or shopping for a brand new vehicle, it is important to educate yourself about the process and what you can expect when the dealer presents you with your loan papers.

Know Where You Stand Financially

No matter what price range you are looking in, it is important to know where you stand financially. If you do not know your three-digit credit score already, now is the time to find out. The higher your credit score the lower your interest rate can be, so it pays to build up your credit before you go shopping for a used car.

You can order a free copy of your credit report from all three credit reporting agencies, so there is no reason not to know this vital information. These days, many credit card issuers even include credit scores on their monthly statement, so you may not even need a copy of your full credit report to know where you stand.

Check with Your Own Bank First

While the dealership will be more than happy to finance the used car you pick off the lot, the deal they offer may not be the best one. Before you sign on the dotted line at the dealership, you should at least see what your own bank or credit union has to offer.

Just stop by the financial institution where you keep your checking or savings account and tell them you are interested in a car loan. They will run your credit and review your financial situation and determine how much you can borrow and at what interest rate.

In the end, you may find that the dealership offers a lower interest rate and a more affordable monthly payment, but having more information is always better than having less. Knowing where you stand and shopping around for the lowest interest rate is the best way to get the deal you need on the used car you need.

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