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Financing a Used Car: Tips for Direct and Dealer Loans

by timmyradloff

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Because of the increasing prices of commodities and cost of living, it’s only right that you find the most economical way of doing everything. When hunting for a used car, don’t just think about acquiring it for a good value; concern yourself with finding a sensible financing method, too. Direct loans and dealer loans are two of the most popular financing schemes for purchasing used cars.

Direct Loans

Direct loans are usually acquired straight from lending institutions like banks and credit unions. Since direct auto loans don’t involve a mediator between you and the lender, you’ll need to do a lot of research to make sure that you know what you’re getting into. Your credit score, financial history, and chosen vehicle model will influence your loan’s terms.

Most lenders provide five-year loans for pre-owned cars less than five years old and one- to two-year loans for much older vehicles. However, a number of lending institutions might not finance cars older than five years because of their low reliability. Before deciding on a lender, try to get interest rate quotes from several providers to ensure that you’re getting the best deal.

Dealer Loans

If you live in the capital of Canada with a not-so-flawless credit history, financing a minivan like the Toyota Sienna Ottawa families love would still be possible. A number of Ottawa car dealerships often have in-house financing departments to assist clients with bad credit in obtaining loans. A dealer loan, sometimes called an “indirect auto loan”, is when a dealership becomes an intermediary between you and the lending institution. Financing from a dealer may entail higher interest rates but lesser chances of refusal.

In fact, some dealers of used cars Ottawa residents depend on may finance any car in their lot, regardless of age. Alternatively, if you want to get a better interest rate on a used car loan, you can ask someone with a high credit score to co-sign for you. It’s not uncommon for loan applicants who have low credit scores and have been denied a direct loan to turn to dealer financing.

Although financing used cars in Ottawa or any other area can become complicated, taking note of the points above can be helpful. You’ll know what’s right for your present situation. Learn more tips at

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