What is the Best Way to Finance a Used Car? A Helpful Guide

Person Caculating Expenses for Purchasing a Car

Statistics show that there are over 39 million used cars sold in the United States every year.

If you know how to spot a bargain, used cars can be a great investment. However, if you don’t have the money to buy one on hand, you’ll have to secure some sort of finance before you make your purchase.

Read on as we look at the best way to finance a used car.

The Best Way to Finance a Used Car

The best way to finance a used car will depend on many factors. Your credit score and the amount you need to borrow are key considerations.

Before you commit to any borrowing plan, you should shop around to ensure that you get value for your money.

The following are the most common sources of financing for used cars.

Direct Loans

As the name suggests, this is the most direct way to secure the cash you need for your used car. Simply go to your local bank or credit union and submit an application.

Rates here are generally quite competitive. However, a low credit rating may prevent you from securing a loan of this type.

Dealer Financing

Many used car dealers will offer to provide financing themselves. 

If your used car dealer provides competitive rates, this is likely to be your best option. It saves you the hassle of going to an institution for your money.

Dealers like Monster Cars are happy to offer you good rates on used car financing.

Online Lenders

Online lenders are another option. These can sometimes offer competitive rates and will sometimes pre-approve your loan. 

They also save you having to travel to a physical lending institution to complete your application.

However, there are many unscrupulous online lenders in operation. If you choose to go down this road, take extra precautions to ensure you don’t get ripped off.

Tips for Finding Used Car Financing

Before you start looking for financing, there are certain things you should keep in mind. These tips will help you streamline the process of securing a loan.

Know Your Credit Score

This is a numerical representation of your credit history to date. It will dictate your ability to secure financing, so you should research it before you start looking.

Know What You Can Afford to Spend

Having a good idea of your budget is important, as it will prevent any time being wasted in pursuit of options that aren’t viable.

Getting the Best Deal on Your Next Car

When you’re shopping for a used car, the first thing you’ll want to do is get a reasonable price for the car itself. However, getting cost-effective financing can be just as important.

The best way to finance a used car is to find a provider that understands your needs and that can provide the funding you want for a manageable rate.

Did you find this article useful? If so, have a look at some of our others! We post regular content on everything to do with vehicles.