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How do used car loans work?
My neighbor is selling their beautiful classic car. It’s my dream car. I have no idea how I’d pay for it, though. Is buying a used car with a loan different than buying a new car?
Lauren Smith · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Congratulations on finding your dream car—it sounds like kismet!
Used car loans are similar to new car loans, but there are a few key differences, such as:
- Higher interest rates
- Shorter term length
- Potential other restrictions
Cars depreciate quickly. So old cars are worth less than new cars. For a lender, that means used car loans are riskier.
To get a loan to buy the car of your dreams:
- Check your credit score. It needs to be 660 or higher.
- Try finding acosigner. A cosigner with better credit can help your chances of getting approved and earning a reasonable interest rate.
It’s important when buying a car to make sure you have the correct car insurance. The
Jerry
app can help you find the perfect insurance for you and that classic car of your dreams. We’ll compare 50+ top insurance companies, like Nationwide, Allstate, Safeco, Progressive, and Travelers, so you get the coverage you need—without overpaying for it.View full answer
- Gregory R.
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