Use a Dealer to Finance a Used Car

If you're like most people, you don't have a wad of cash to throw down on a new vehicle. You shop around for a used car to help save on depreciation and upfront costs, but you still need some financial assistance.


  1. Know your credit score. If your credit score is more than 680, you're considered a prime borrow. You are eligible for the best interest rates available. The higher the credit score, the more you can bargain to negotiate a low interest rate. This will help you in the long run, as interest can accrue and end up adding a large sum to your bill.
  2. Consider the age of the car. If your car is less than five years old, a lot of lenders will offer a five-year loan. If you're purchasing a used car, there's a chance your vehicle is older than five years. In this case, you might only be eligible for a one to two year loan, even when the lender is financing you. This means your monthly payment will be bigger, as you are required to pay off the balance in a shorter amount of time.
    • Lenders that are financing a used car older than five years worry that the vehicle will not last that long. Additionally, some lenders impose minimum mileage restrictions (usually around 100,000), and will not finance salvaged titles. If you're thinking of buying a car from a classified ad instead of a dealership, keep in mind that these lenders might not fund loans for a used vehicle bought through a personal party.
  3. Solicit rate quotes from different lenders before signing a loan. Interest rates are typically 4-6 percent higher on used car loans versus new car loans. You can ask your bank or financial lender with the best offer for a pre-qualifying letter and take this letter to the dealership with you. If you choose to get your financing through the dealership, note that the rates can be higher. Dealers will typically finance all the used cars they sale, regardless of age.
  4. Research competitive rates based on your credit score before you solidify a deal.

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