My old Volvo began requiring such frequent mechanical work that the expenses could have amounted to a monthly car payment. In addition, I was tired of the headache that came with every repair that cropped up, and it was hard to get to work when my car was being serviced. I decided it was time for an upgrade. Being an underemployed college graduate with student loans to pay off, it will be a long time before I can afford a brand new car, so my options will be limited to used cars. When it came time to replace my Volvo, I wanted a used car that still had a lot of life left in it, which meant it was more expensive than I could pay in full, but I soon learned that finding financing for a used car is a complicated task.
Loans for used cars are not very profitable for banks because there is not much interest earned off a small loan. The interest rates are high for the borrower and there are a lot of restrictions. For example, some banks do not give loans for cars that are more than two or three years old. I was afraid I would have to get a car that was more costly than I planned for, just to meet the requirements of getting a used car loan. The other option was to find an extremely cheap, old car that I could pay cash for, but I knew I would have to plan for frequent and costly repairs. It seemed like there were no good options.
I finally found a reasonable solution when a friend suggested local credit unions. I began researching and quickly learned that the interest rates on average were two percent lower than what bigger banks had quoted me for an old car. To the credit unions, it did not matter that I was interested in a car more than five years old; as long as I had good credit, they were willing to give me a small loan. The main requirement was that I had to open a savings account with a five dollar minimum and get comprehensive insurance coverage on the car.
The credit union was the way to go. I got a loan with a four percent interest rate and a very reasonable monthly payment that I am able to afford even during the months when money is extra tight. I was able to get a car old enough to fit within my price range, but new enough that I do not have many maintenance costs. I am spreading the word among my friends that they should look into their local credit union when they need financing for small loans. Sometimes used car dealers have a good relationship with credit unions to help their customers get good loans. When people are confronted with the tricky task of financing a used car, I hope they are able to find a credit union that gives very reasonable loans. Finding a good loan made it possible for me to get a reliable car.