Revealing Two Myths About Car Financing

A car can be one of the largest purchases that you will make, and while an automobile can be a status symbol, it can also be an essential mode of transportation. Due to the size of this purchase, it is common for people to experience some stress during the shopping process. Often, this stress is further compounded by being misinformed about the car buying process. To this end, you should make sure to have a thorough understanding about the truths behind the following couple of notions about car financing services. 

Myth: You Can Only Finance An Auto Through A Bank

Due to the size of this purchase, it is common for individuals to need financing in order to purchase a car. However, it is commonly assumed that the only way to obtain this financing is through taking  out a traditional loan from a bank. While this is certainly an option, banks can have extremely strict lending requirements, and individuals with poor credit histories or low incomes may find it difficult to be approved.

Fortunately, it is fairly common for dealerships to offer financing options to customers. While it will still be necessary to pay interest or a financing fee, this can be an invaluable option for those that lack the financial requirements for a traditional auto loan.

Myth: You Can Not Finance A Used Car

In order to save money, it is common for people to opt to buy used cars. While this can certainly be an excellent way of reducing the costs of this purchase, it should be noted that it may not be possible to get financing for cars that cost below a certain threshold. This threshold can vary from one financing service to another. These restrictions may be slightly inconvenient, but they reflect the reality that financing these extremely low-cost cars can be difficult to the overhead costs involved and dealers are often left with little to no profit margin. Also, these cars often lose their value more rapidly than newer cars, which can make them more risky to finance. As a result, you should check with the dealership for their rules governing financing older cars and speak with a bank representative to determine the smallest auto loan that the bank will consider for a used car.

Buying a car can be somewhat overwhelming to those that have never had the experience of going through the process of making this purchase. To avoid some routine problems, you should be aware of the truth behind some of the more common myths around car financing. By understanding that banks are not the only option for financing this purchase and that there are limits to which used cars can be financed, you will be better able to make smart choices as a car buying consumer.