How to Finance a Pre-Owned Car Purchase

So you’ve been thinking about getting a “new to you” pre-owned car and after beginning your early searches you may be realizing that they are more expensive than you first thought and that you need a loan to help fund this purchase.  Have no fear because this process is not difficult and can be accomplished quickly.

We have found through experience that the local credit unions and local banks typically offer the lowest interest rates and provide the easiest path to purchase.  Credit unions are often open to all individuals so don’t think you’re not eligible before giving them a call or reviewing their eligibility requirements on their website.  Getting yourself pre-qualified for a given loan amount is a really good idea so that you can not only establish a relationship with a banker but also focus your vehicle search in the price range that matches your borrowing limit.

With a price range in mind that aligns with your lender's pre-approval amount, it’s time to have some fun and find that car or truck that you absolutely love.  Once you’ve decided on the ideal vehicle and negotiated for the best price the next step is to ask your salesperson for a sales contract that has all of the fees related to the purchase and also includes the sales tax.  It’s also a good idea to ask the salesperson for the Kelly Blue Book report because many bankers will require it.   You will then present this sales contract and KBB report to your loan officer or your dealer will email them over for you.  With these two documents in the banker’s hand they will have exactly what they need to begin the process of originating a loan to purchase the vehicle.

The loan officer will speak directly with you and they should be updating you with the current status of your loan each step of the way.  Once you have been approved, you will need to sign the final loan documents, either in person or online depending on the lending facility.  The lending institution will either give you a Cashier’s Check or a ‘Letter of Guarantee’ to bring to the dealer when you come in to sign the final papers before taking possession of your new car or truck.

At Precision Auto Sales of Tucson, we will have all of your paperwork prepared and you will be on your way in about 10 minutes but be aware that this process can often take a couple of hours at the big dealerships.  

Things to keep in mind:

Your credit history and current income will dictate the interest rate that you will pay, but sometimes that rate is negotiable so ask for a better rate and you may be pleasantly surprised to get one.

Many banks and credit unions will not finance a car that is older than 10 years of age or has more than 100,000 miles but if they will finance the vehicle the interest rate goes up in relation to the age and mileage.

Be very leery of dealers who take payments themselves.  These dealers are referred to as “Buy Here Pay Here” dealers and their interest rates can be as high as 25% - 40% per year!