Navigating Used Car Vehicle Financing Roadblocks In North Carolina
Buying a new or used vehicle can be a challenging process. Visiting used car lots is simultaneously fun and stressful. Whether you need a practical vehicle to get you from point A to point B, or you’re searching for your dream car, getting financing for your purchase can be difficult. At AutoMax, we want to be your go-to buy here pay here car lot.
Understanding both the financing roadblocks and ways to overcome those roadblocks will make the car buying process easier. Below, our team of in-house car financing experts share a few tips.
Some general rules about auto financing have been in place for many years. Vehicles over 10 years old or with mileage over 150,000 miles have been common cutoff points for getting financing.
However, some people have unique car buying requirements, including a desire for particular vehicle power and style choices, and these traditional cutoff points are not relevant. Perhaps your dream car was manufactured over 10 years ago and you don’t want to compromise once you find that vehicle. Typically, a bank will not finance a vehicle that’s over 10 years old. However, credit unions and other lenders may be more flexible with vehicle age.
This vehicle age roadblock may need to change in the future. According to Car & Driver, at the end of 2020, the average age of a used vehicle on the road was close to 12 years. There are several reasons for the increase in used vehicles, including the 2008 recession, the 2020 pandemic, and the increased cost of new cars. Another reason for this increase is the higher quality of cars and trucks manufactured in recent years.
High mileage vehicles are becoming more acceptable, and the 150,000-mile barrier may change. Because they manufacture cars and trucks with higher quality, increased mileage does not mean the car is not usable.
The price of your chosen vehicle also defines whether you can get financing for its purchase. A Lamborghini might be your dream car, but can you afford it? In 2019, manufacturers produced over 91 million vehicles worldwide. With that enormous choice, you can find a vehicle you can afford.
Consider A Larger Down Payment
If you cannot find low down payment cars, increasing the amount of your down payment can make the difference in qualifying. You may find that waiting a bit and saving money will make a difference when applying for car financing.
This is often easier said than done, but AutoMax offers a Tax Max deferred seasonal payment program that allows you to defer most of your down payment until you’ve received your tax refund. This allows you to have a larger down payment but only pay $89 today. When your tax refund comes in, you pay the rest of your down payment.
Find A Cosigner
When your credit history is less than stellar, or you have no credit history, a cosigner can make the difference between obtaining a car loan or not. If you can qualify for the loan but at higher interest rates, a cosigner with good credit can lower the interest rate. Although finding a cosigner can be a risky proposition, especially if they are a relative, it may be the best option.
Improve Your Credit Score
Every consumer in the United States is entitled to a free credit report each year from one of the three major credit reporting agencies.
According to Experian, five critical factors make up your credit score. Payment history is the largest component at 35%. Consistently paying your bills on time improves this component. The credit utilization ratio shows how much of your available credit you are using and makes up 30% of the score. How long you have had a credit history makes up 15% of your credit score. Usually, the longer your credit history, the higher the credit score. Your credit mix makes up 10% of your credit score and shows what type of credit you use. The new credit score accounts for 10% of the score. This new credit category shows the number of requests the credit reporting agencies receive for your credit score.
Be aware that allowing companies to pull your credit score negatively affects this number.
Pre-Approval Vs. Pre-Qualification
Some car buyers who worry about qualifying for a car loan and want the best interest rates may try to get preapproval from a lender before car shopping. Pre-approval for a car loan means the lender has reviewed your credit and asked the credit agency for your credit report. Pre-qualifying means the lender has reviewed your financial history but has not formally requested your credit report. Since every request for your credit score affects that score, be aware of the tradeoff for pre-approval.
Used Car Financing At AutoMax
Buying your vehicle from a trusted dealer is critical when financing an auto. Many companies have used cars for sale, but AutoMax has a long and stellar reputation in the used car financing world. We want to be your buy here pay here auto dealership and will work hard to meet and exceed your auto-buying needs. Shop our online inventory, and then come see us at our Youngsville dealership or our Henderson dealership.