This past week I was reminded of how different a simple financial transaction can be depending on what you are buying, how much you are spending, and your personal history of using credit. I was helping an individual find and buy a used car. Advertising would lead you to believe that there are plenty of good used cars to select from and financing is affordable.
We took advantage of the resources available on the web to comparison shop. My personal lesson in how the experience can be different began after a suitable choice was found, test driven and selected. It included the following key points:
- High mileage vehicles face limited financing options. The vehicle we found had an odometer reading just over 100,000, was in excellent condition with a history of excellent maintenance. The dealership told us only one bank they worked with would offer financing for high mileage vehicles and your credit history had to be excellent.
- The cost of the vehicle must be sufficient to justify writing the loan. The vehicle was priced right compared to what online sources reported for its make and mileage. When an offer was made to put some money down to lower the monthly cost, a warning was given that we couldn’t. If the amount financed dropped too low, financing wasn’t available. There was no money to be made for writing the loan.
- Interest rates are higher for older vehicles with high mileage and you are limited on how long you can finance. Okay, so we already knew this part; we had already visited with the local bank to determine financing options available through them, and they identified the same issue.
Transportation is a key part of being able to get to work and meet family needs, especially in rural communities where public transportation is non-existent. After my shopping experience, I understand more clearly the barriers families face in obtaining reliable transportation that is affordable. To learn more about the issue and possible steps to address the problems with affordable transportation read this study.