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Used Car Financing Tips

Buying a used car can save you a lot of money. However, many people avoid buying used cars because of the many questions and uncertainties related to the used car buying process. Where to look for used car financing? How to finance the used car purchase? What to look for in a used car loan? This article aims to provide you with the answers of these questions as well as useful tips on used car financing.

  • Run a check on the used car.

    Before you think about the used car financing, you need to make sure that the car is in good condition. Since you are buying a car that has been used it is a good idea to limit your choice to late-model vehicles that have low miles on the odometer. Check the vehicle's history, have a professional mechanic inspect it, and test drive it. Your goal here is to make sure you get a car that is reasonably priced and in good condition.

  • Estimate how much you can afford.

    If you are a smart car buyer you will start thinking about how much you can afford for a used car at the very beginning of the shopping process. You need to include the following components in your estimations:

    • Monthly payments: Assess how much you can pay each month for your used car loan payments.
    • Down payment: Allocate enough cash to put down in order to reduce your monthly payments.

    Once you have determined how much you can spend for the monthly payments and the down payment you will be able to determine a realistic price range for a used car that you can afford.

  • Set up your used car financing.

    You have three options to finance a used car purchase:

    1. Pay in cash.
    2. Used car financing through the dealer. This is rarely the best option but it works for some people. It all depends on your credit score and the interest rates offered. Sometimes, by prearranging the used car financing through an independent source, dealers may offer a relatively low-interest loan.
    3. Used car financing through a bank, on-line lender or credit union. This way of financing (through an independent source) is usually the best since you will have the most control over the transaction and you may save money. It will not only avoid dependency on dealership financing but it will also allow you to shop for competitive interest rates ahead of time.
  • Going through the finance and insurance process.

    Whether you have chosen to buy your used car from a private party or from a dealer you still need insurance for the car you have just bought. The Finance & Insurance person will probably try to talk you into buying a number of additional items which are typically expensive so make sure you get only what you need.

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