How to Pay for a Used Car

A used auto from a car dealership only depreciates by about half the sticker price over the course of four years. That keeps the price of a low-mileage car out of reach for most moderate income families. Few are able to save enough to pay cash to car dealers for a used car that's in reliably good condition. Consider the options for financing and take sensible steps to make it work toward the purchase of a road worthy used car.

Instructions

1

Save money for a down payment. The bigger down payment you are able to give to a bank or car dealership, the better your loan terms will be. Spend at least three month putting aside the amount you expect to pay for a monthly payment on a used auto loan. This will show you what it's like to be making payments on a car before you are committed to the terms of a loan.

2

Get pre-qualified for a loan to find out exactly how much you can afford to borrow toward the purchase of a used car. Ask your bank about a car loan. Find out how much they will lend you, what the finance charges will cost and the monthly payment amount. This will give you a price range for cars you can afford.

3

Shop for a car online, in papers and magazines and at local car dealers. Take note of the types of cars your pre-qualified loan amount will buy. Be realistic about which cars you can afford and stay within your price range.

4

Compare finance rates between banks, credit unions, and auto dealers. In some cases a car dealership can offer better finance rates due to connections with multiple lenders, or give a discounted price on the car for using their financing plan. Add up all the factors including price, payments, longevity of the loan and finance rates to calculate the best deal.

5

Make all monthly payments on time and keep track of each transaction. Add each payment made to the down payment and keep a running total of the amount you still owe for the used car. Your prompt payments will help to qualify you for better lending terms on your next loan.