Used Car Financing FAQs

At Lomira Auto in Lomira and Neenah, WI, our family-owned and operated used car dealership takes great pride in helping our customers find the car, truck, sedan, or SUV of their dreams at a price they can afford. As part of our continued commitment to providing our customers with the very best in used car sales and vehicle servicing, we’ve put together several important answers to the most common questions our customers have about used car financing.

FAQs:

What is the difference between dealership financing and a car loan?

The main difference between dealership financing and a car loan is that a car loan is typically provided by a bank, lending institution, or credit union, whereas dealership financing is provided by our dealership.

With a car loan, the bank or credit union lends you money to purchase the used car from Lomira Auto. In return for lending you the money, you pay the bank a specific amount each month that includes the principal and interest. With dealership financing, our dealership lends you the money to purchase your used vehicle, and you pay our dealership a monthly payment.

Dealership financing is often a good choice for customers who do not have the best credit rating. We offer very favorable financing options to help you with your purchase.

How much should my car payment be?

At Lomira Auto, we believe all customers must first understand what used car, truck, or SUV they can afford to purchase. Your car payment should be an amount that you can afford and does not put financial stress on your budget. A good rule of thumb is to ensure that your monthly payment doesn’t represent more than 10 percent of your monthly income.

The Lomira Auto team can help you determine what that amount should be.

What is an upside-down loan?

This simply refers to the point where you owe more on the car loan or dealership financing than your used car is currently worth. Ultimately, this situation is fine as long as you don’t intend to sell your used car.

Can I trade in a car that has a loan on it?

Yes. At Lomira Auto, you can trade in your existing vehicle even if it has a loan with an outstanding balance. We will help you determine your car’s current value.

If the value of your loan is lower than the value of your car, then the loan is paid off and the difference is applied to the purchase of another used car at Lomira Auto.

Do dealerships inspect used cars?

While Lomira Auto cannot answer for other dealerships, we can say that every used vehicle we sell at our dealership is inspected by our highly-trained and extensively experienced service technicians and expert mechanics.

Our sales, finance, and service departments work incredibly hard to ensure our customers have the very best selection of near-new trucks, sedans, compact cars, SUVs, and crossovers. As such, Lomira Auto never sells manufactured buybacks or lemon law vehicles.

How to find the best auto loan for buying a used car?

Provided you have good credit, it should be easy to secure an auto loan with a competitive interest rate. Do not stick to just one bank or credit union. Apply to several. You will then receive different offers with different interest rates and simply have to choose the lowest interest rate and the best offer.

Ultimately, however, not everyone has good credit. Even if you do not have the best credit, our dealership can work with you to ensure you have the financing or loan you can afford.

How is a used car loan different from a new car loan?

While this is not always the case, it is common for a new car loan to have lower interest rates when compared to some older, used cars. The main difference is that a new car typically has a higher value than a used car. As such, you will be making monthly payments longer on a new car compared to a used car.

Another benefit of buying a used car is that someone else covers the depreciation cost - meaning you’re buying a less expensive car. Therefore, even if the interest rate is higher on a used car, you’re still saving a tremendous amount of money compared to a new car with a new car loan that has a lower interest rate.

How does a used car loan work?

With a used car loan, a bank, credit union, or other financial institution or lender provides you with the total value of the used car upfront. The amount you borrowed to purchase the used car is then charged an interest rate - which you cover with your monthly payments. So, while you may get a used car loan for $10,000, you won’t have to pay that amount back all at once. Instead, you’ll pay that amount off over 24, 48, or 72 months or more, depending on the length and terms of the car loan.

Schedule a Financing Appointment at Lomira Auto Today!

If you have been thinking about purchasing a used car but are concerned about whether you can qualify for a bank car loan or financing, don’t despair. At Lomira Auto, we understand that not all customers have stellar credit scores. We understand that sometimes you need a little help.

Our financing team can help you secure the used vehicle you're most interested in and help work out a monthly payment plan you and your family can afford.

To learn more about dealership financing at Lomira Auto, contact us today, or visit one of our dealerships in Neenah or Lomira!.