Financing Your Used Car Purchase

Save money by borrowing from a bank.

Some used car dealers offer financing, and even advertise that they will finance anyone, regardless of past or current credit problems. This can be a very expensive way to finance a car, since the car itself is often priced much higher than its true market value. Add in the high interest rates the dealer will charge and your total monthly payment can escalate quickly. Miss a payment, and the dealer can repossess your car and sell it again, charging you for any difference between the amount you promised to pay and the amount he receives from a subsequent buyer.

Getting financing from a traditional lender, such as your bank or credit union, is usually less expensive than the financing a used car dealer will offer. Interest rates are typically only a few percentage points higher than what's charged for a new car loan.