Buying a car can feel overwhelming, even before you look at the price tag. There are decisions about make and model on top of money decisions. It is a bit more than picking the right watermelon at the market. After all, that melon will only be with you for a few days and you certainly hope your new car will last longer than that.

A great way to save money on a car is to get a used vehicle. It is fairly common knowledge that a car starts depreciating the moment you drive it off the lot. Unless you are buying a car once owned by someone famous, you won’t make money down the road. Still, you want to buy a car that serves you well, meets your needs, and is a reliable vehicle for you and your family.

All those boxes can be checked by investing in a reliable used car, to include rebuilt title cars (also referred to as reconstructed or restored titled cars).

The ideal way to buy a car is with cash. You don’t deal with interest rates, repayment, or financing costs. But, we all deal with less than ideal situations all the time, and many of us don’t have enough extra funds lying around to hand over a fat envelope of cash to the dealer. But, a bargain on a good car is still possible. There are financing options for used cars, and following a few key steps will point you in the right direction and help you land the right car for the right payment.

The Step by Step Guide to Used Car Financing

(Agence Olloweb/Unsplash)

Step One: Check Your Credit

Hopefully, you are reading this because you are pondering getting a new car, not because your car just started smoking and needs replacement immediately. Looking down the road gives you more time. And more time generally means more options.

Your first step is to check your credit score. There are plenty of agencies out there that can offer this service, and it will be incredibly helpful to have your credit score in hand as you begin to shop for cars and financing deals.

Strong credit scores not only make banks or credit unions more willing to lend to you, they also increase your chances for a better interest rate. If you get your credit score and it is lower than you’d like, take the next step to find out why. Maybe you forgot to pay a bill years ago, and there’s still an opportunity to make it right. Maybe there’s an error on your report that you can resolve. It’s worth the time to do anything you can to bump that score up.

Step Two: Set a Budget

This is not nearly as much fun as picking out the paint color and planning your playlist for that first road trip, but deciding how much you can afford to spend is a crucial step.

Once you have your credit report, a bank or credit union can take a look at your finances and tell you how much they are willing to loan you. Be warned! Just because they are willing to give you that much doesn’t mean you can afford that much! They can’t answer that question for you.

Take a look at how much you can afford for a down payment, monthly payments, and what you want to keep on hand for repairs, gas, insurance, and registration fees. Get that monthly payment down to a number that feels doable. From there, you can derive your loan amount.

Now you can start shopping!!

Step Three: Research, Research, Research

Go ahead and work on that playlist, but also examine what you want in a car. Think about how often you drive and where you drive. What’s most important to you? Four-wheel drive? Reliability? Number of seats? Speed? What car makes and models will best fit your needs? Read reviews, ask friends, and narrow it down.

Once you have an abbreviated list of car makes and models to choose from, take a look at what is out there. Reach out to used car dealerships. Tell them what you want and ask them to reach out if one of the cars on your shortlist pops us. Scan the online markets and set up alerts if one of your favorites pops up.

After all that work, several winners might float to the top. That’s exciting! But, there is still more research to do. Tap into Kelly Blue Book or Edmunds to compare actual worth with how your top picks are priced. Once you’ve narrowed down your options, take test drives, review vehicle history reports, and perhaps have a mechanic take a look to see if there are any potential problems.

After all that work, you’ll land a winner. Now, you deal with paying for it.

Step Four: Find the Financer

There are a few options for lenders, and it is worth the time to find the right fit. The traditional bank loan is steady, well-researched, and reliable. Still, sometimes you can find better rates with other options.

If you belong to a credit union, check with them to see their rates. Credit unions are often smaller and local and have more flexibility to work with their members than enormous banks. These will generally be your best option if you have strong credit. Used car financing can have higher interest rates than new, but it also depends on the age of the car and the safety options that are available on the vehicle.

If your credit isn’t as strong as you’d like, there are still options! Some online lenders offer financing options for people with lower credit scores. The downside is that those interest rates may be higher and customer service can be more cumbersome since you’re dealing with an online company.

There are often financing options available through dealerships. These can sometimes be your best bet because they are motivated to sell you the car, and it benefits them to keep as much of your business in-house as possible.

Buying a car, new or used, is a process. But, like most things in life, hard work pays off. Do your research, stick to your budget, and be patient. The right car and the right way to pay for it are out there!


Buying a vehicle requires tons of considerations. What model and make would you like? Do you want to purchase a new or used unit? How will you pay for it? We have our own unique situations, but we mostly want to pay with cash if possible. Otherwise, you can still go for other financing options. Read about these in this infographic.

The Step by Step Guide to Used Car Financing


The Step by Step Guide to Used Car Financing