Category Archives: Financing

buying a used car

Can You Get a Car Without a Down Payment?

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You desperately need to buy a car but you lack the cash to make a down payment. A dealership might tell you that’s no problem – and it might not be. For them. But for you, it could mean a very high monthly payment that you can’t afford. So what happens when you need a new car to get you to work or school but you don’t have the cash to put down? Believe it or not, you do have a few options. 

RepoFinder.com has a huge inventory of bank-owned vehicles ready for their next owners. These vehicles are priced attractively so that the banks can recoup some of their losses. If you’re shopping for a used car on a budget, this could be the best way to get the car you need at a price you can afford – and without a large down payment. 

How Important are Down Payments? 

Buying a car is one of the biggest purchases of your life. The size of your loan depends on how much you put down, as well as the interest rate and repayment terms. Ideally, you should try to cover at least 20 percent of the purchase price when making a down payment. This can come from a trade-in, the cash you put down or a mix between the two. 

Ultimately, there is no one-size-fits-all answer for how much of a down payment to make on a car. But the more you put down, the better. Here are a few reasons why: 

  • With a 20 percent down payment, you might get better loan terms or a lower interest rate 
  • When the car depreciates, a sizeable down payment prevents you from owing more on the car than it’s worth (this is called ‘upside down’)
  • Without a down payment, you’re rolling all title and registration fees into your financing, causing you to pay more over the life of your loan 

Even a Small Down Payment Makes a Difference 

If you can’t afford to put 20 percent down, even a small down payment can make a difference. Let’s say you purchase a car for $20,000 at a 5.13 percent interest rate. At 60 months with nothing down, your payments are $415 a month. By putting just $1,500 down, you can reduce your monthly payments to $387. 

What if you suddenly need a new car but don’t have any money saved up? Good news – you can trade in your vehicle and use its equity for the down payment. Of course, this only works if your car is paid off or worth more than what you owe on it. But even if your car is only worth a few thousand dollars, this is enough for a down payment. 

Shop for Cheap Used Cars on RepoFinder

It sounds attractive to buy a car with zero down, but it’s usually not the best decision. You’ll likely get saddled with higher monthly payments and end up owing more than your car is worth. If you’re still not having any luck, shop the affordably priced bank-owned vehicles on RepoFinder.com. There are motivated sellers looking to sell repossessed vehicles at a discount to the public. You can find great deals and a simple $1,000 down payment goes a long way! 

financing for a car

Can I Get a Car Loan with Bad Credit?

Car loans are available for people with bad credit, but they typically have high interest rates. In an ideal world, you can work on building up your credit before purchasing a new car. However, this isn’t always possible. If you need a car now, you’ll have to bite the bullet and do so. 

Fortunately, there are some ways to get a better car loan, including shopping around and making a good-sized down payment. Below is more information on getting an auto loan with poor credit. 

Check Your Credit Score 

Claim a free copy of your credit reports. This way, you’ll know where your credit falls and the types of loans you’re eligible for. Generally speaking, a credit rating of 669 or less is considered fair or poor. If you don’t need a car immediately, we recommend working on bringing up your credit score. Things you can do include: 

  • Pay all your bills on time 
  • Reduce your debt as much as possible
  • Check your credit report for errors 
  • Have any inaccuracies removed from your report 

Research Different Auto Lenders 

If you can’t wait on a used car, you’ll need to find out what auto lenders serve people with lower credit scores. These lenders typically have higher interest rates but they can help you get the car you need in a pinch. Here’s a complete list of specific auto loans that are good for people with poor credit. 

Save for a Down Payment 

If you can put money down on your used car purchase, you can take out a smaller loan and pay less in interest overall. Plus, having a down payment can help you secure a loan easier as this is something that many lenders take into consideration when determining risk. 

Consider a Cosigner 

Another option that’s worth thinking about is adding a cosigner to the loan. If you have someone who is willing to do this, they can help you qualify for a better loan and interest rate. However, the cosigner is also assuming this risk, so make sure you’re prepared to make all the payments on time. Otherwise, their credit is at risk. 

Check with a Credit Union 

Credit unions are often willing to work with people who have bad credit. And, many credit unions sell vehicles they have repossessed from previous owners, which means one-stop-shopping for you. Check out the inventory from RepoFinder – the nation’s largest database of repo vehicles. Many credit unions sell their repo inventory at discounted prices and are willing to work with people who have low credit ratings.

As you can see, it is possible to get a car loan with bad credit. Try to give yourself time so that you can make the right decision for your needs and budget. Browse RepoFinder’s inventory and see the wide selection of sedans, pickups, crossovers, minivans, etc. that we have available through local credit unions. 

financing for repo cars

Is it Better to Finance My Car through the Dealer or a Credit Union?

If you’re buying a car and need a loan to help pay for it, you have the option to get financing through a bank or the dealership. The right choice depends on various factors, such as the type of vehicle you’re buying. By understanding your options for financing, you can make the best decision for your next car purchase. 

Financing through a Bank 

Bank financing involves going directly to a bank or credit union to get an auto loan. Generally speaking, you’ll get a quote and letter of commitment that you can take to the dealership or even an online car auction. This shows that you’ve already been preapproved and gives you stronger negotiating power. 

The nice thing about going through a credit union or bank is that you’re getting true rates. There are no markups that you might get with a dealership. The only thing to be aware of is the difference between buying a new and used car. Some banks and credit unions have limits on the vehicle’s age and mileage. 

Financing through a Dealer 

This option works the same way as bank financing, except that the dealer is doing the work for you. After you pick out the car you want, the dealer will have you fill out an application and submit it to multiple lenders. This allows you to compare rates and terms so you can get the best deal. 

Typically, you’ll get lower interest rates on a new car. Used or repo cars often come with a higher interest rate. Sometimes, the dealer may even negotiate a higher interest rate than what the lender offers and use this difference as compensation for handling the financing on your behalf.

What Financing Option is Right for Me?

The best financing option is the one that will save you the most money. We generally recommend starting with bank financing so that you can see what the banks and credit unions are willing to offer you. You can then take this information to the dealer and ask them to get you quotes as well. 

Now, if you’re planning on buying a brand new vehicle, you’ll probably find that dealers offer the best financing, including 0% APR. If you’re going to buy a used or repossessed vehicle, applying for a car loan through a bank or credit union is probably best. In fact, if you’re buying a repo car, ask the seller about their financing options, as they may be willing to cut you an even better deal. 

Save Money on Used Cars at RepoFinder 

RepoFinder.com has a wide selection of repossessed vehicles that are available to the public. You do not need a dealer’s license to purchase them. Shop our inventory of cars, trucks, SUVs and recreational vehicles and see how affordable they are. Come with pre-approved financing or talk to the banks and credit unions about your options. A safe, affordable car is within reach!

woman shopping for auto loans

How to Get a Low Rate on a Used Car Loan

Shopping for cars is fun. Shopping for car loans – not so much. The good news is that you are in a stronger negotiating position when you shop for auto loans in advance. Many people don’t do this until they find a vehicle, but at this point, you’re at the mercy of the banks. 

Below are the steps to take to get the best rates on a used car loan. 

Shop in the Right Places 

Don’t wait to look for financing until you’ve won your bid. The best way to get lower interest rates is by shopping for car loans ahead of time. This way, you can compare shop and take advantage of available discounts and incentives. 

Where can you shop? Consider large national banks like Chase or Bank of America, as they tend to have special promotions and automated processes. Also try credit unions and community banks. Credit unions usually have lower interest rates than banks, whereas community banks tend to be more flexible and easier to communicate with. Other options worth looking into are online lenders and financial companies. 

Get Pre-Approved on Your Auto Loan 

Once you have shopped around for quotes, take the next steps to get pre-approved. Having a pre-approval in place shows the seller that you are qualified to purchase the vehicle. And, if you choose to use the seller’s financing services, they’ll know what rates they have to beat, which can result in an ever lower rate for you. 

If you find that you’re not approved for a car loan, be wary of dealers that say they can finance your purchase regardless of your credit. You could end up paying very high interest rates. In this case, it’s better to work on building your credit and trying again for a loan at a later date. 

Know Your Credit Score

Speaking of credit scores, it’s important to know how these numbers affect your ability to get a loan and their influence on your interest rates. Credit scores are important because they tell lenders how likely you are to pay back the loan. Having a high credit number is a good sign, resulting in faster approvals and lower rates. 

According to Experian, buyers with bad credit pay four times more than those with excellent credit. Again, if your credit isn’t good, it may be best to wait on a vehicle and work on improving your score. This way, you can get better rates and loan options when it comes time to buy a repo. 

Manage Your Loan-to-Value Ratio (LTV)

The loan-to-value ratio is the value of the vehicle you’re buying compared to the amount you’re borrowing. For the best interest rates, you’ll need an LTV of 80% or less. If you have an LTV that is greater than 100%, this means that you’re underwater or have negative equity. If something happens to your car, your auto insurance carrier won’t pay for the total loss, which means you’ll still be on the hook for the rest of the loan balance. 

When shopping around for a repo, be sure to check out your options for financing in advance. This way, you’ll have everything ready to go when you start bidding on vehicles. For a full selection of repo lists from local banks and credit unions, visit RepoFinder.com. 

driving a repo car from a credit union

Is it Smart to Buy a Repo from a Credit Union?

If you’re thinking about buying a repossessed car, truck or recreational vehicle, you’ll find a number of ways to make this purchase. However, not all are created equal. For example, if you buy a repo from a dealership, you are going to pay more because the dealership has taken some time to fix and clean the vehicle. For the best prices and freedom in negotiations, it’s smart to buy a repo from a credit union.

What is a Credit Union? 

A credit union is a financial cooperative that is owned by its members. It exists to serve its members, allowing them a safe place to save and borrow money at affordable rates. Like banks, credit unions also accept deposits and make loans. They also repossess things when their borrowers don’t pay. 

Compared to banks, credit unions don’t have various departments and teams to manage repossessions. This means that in a short amount of time, they can start looking like used car lots. The solution to this problem is to get rid of repossessions as quickly as possible. It’s a win for the credit unions because they get vehicles off their lots, and it’s a win for buyers because they have safe vehicles to choose from. 

What are the Benefits of Buying from a Credit Union? 

Because credit unions are operated independently, there are different procedures that they follow. So, before buying a vehicle from a credit union in your area, ask about their process for listing repossessions. Gathering all the information you can will increase your chances of finding a safe and reliable repo car. 

Here are some benefits to purchasing a repo from a local credit union: 

  • Competitive prices. Credit unions want to get the cars off their lots and recoup their losses. You can find lower-than-average rates on plenty of great cars by browsing lender inventories. 
  • Ability to negotiate. Most of the time, credit unions are open to negotiations. Be sure to do your research so that you can make a compelling offer that’s hard to refuse! 
  • Option for financing. It’s possible that you can get financing directly from the credit union. Typically, credit unions have lower interest rates and fees, too.  
  • Inspect the vehicle. As long as you limit your search to local credit unions, you should be able to inspect the vehicle on their lot. If you find a vehicle in another state, you can have it shipped to you. 

Bottom line: Buying a repossession from a credit union is a great option, especially when you’re shopping for a vehicle on a budget. To browse a full list of repossessions in your area from local banks and credit unions, visit RepoFinder.com. It’s free! 

credit score before buying used car

What Credit Score Do I Need to Buy a Used Car?

Whether you buy a new car, used car or repossessed car, you’ll need to pay for the vehicle before you take it home. Unless you have the cash upfront, you’ll have to take out a car loan. One of the biggest predictors in the type of loan you get and the interest rate you pay is your credit score. Knowing how important this three-digit number is, what do you need to get a decent used-car loan? 

Average Credit Scores for New and Used Cars 

According to a 2017 Experian report, the average credit score for a new-car loan was 713 and 656 for a used-car loan. A repossession is no different than a used car in the eyes of a bank. But, it’s your responsibility to do your homework. A used car from a dealership might have a warranty, but a repossession will not (unless it’s from the manufacturer). If you take out a loan for a repo and it ends up not running, you are still responsible for paying back the loan. 

So, what happens if you don’t have the average 656 credit score? You can still get a loan, but you can expect to pay more in interest rates. Someone in the low 700s might see interest rates of 5%, while someone in the low 500s might see 15%. Also, the state you live in makes a difference, as some states give higher insurance rates to those with poor credit. 

To break things down, here is a chart of credit scores vs average APRs on new and used vehicles, courtesy of Experian. 

Credit score Average APR, new car Average APR, used car
Superprime: 781-850 3.68% 4.34% 
Prime: 661-780 4.56% 5.97%
Non Prime: 601-660 7.52% 10.34%
Subprime: 501-600 11.89% 16.14%
Deep subprime: 300-500 14.41% 19.98%

Before You Start Shopping

One of the benefits you have when buying a repo car is the financing. When you purchase a repo directly from a lender or credit union, they are willing to work with you on the financing. They are banks, after all, and they make money by lending money.

Because it can take time to find the perfect repo car, use this period to check your credit profile and make improvements. You can request a copy of your credit report from the three major credit bureaus – Equifax, Experian and TransUnion – once a year. Visit AnnualCreditReport.com or call 1-877-322-8228. 

Once you know what your score is, you can get a realistic idea of what interest rates you will be paying. If you have to delay your repo car purchase, bring your credit score up by doing the following: 

  • Pay your bills on time
  • Avoid applying for new credit
  • Keep credit card balances low relative to your limits
  • Leave old accounts open 

For a complete list of repossessed cars, trucks, ATVs, RVs, boats, etc., visit RepoFinder.com today. Our list includes banks, lenders and credit unions that have repossessed vehicles and are willing to work with the public to sell cars and provide financing.