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Step
Two
Financing
a Used Car
The smart shopper will consider how to
finance the car she wants to buy at the beginning of the shopping
process. This will avoid unpleasant surprises later in the game.
And, by tackling this question before getting around all that shiny
metal and chrome, you can make an unemotional decision that fits
your lifestyle.
Three Key Figures
You need to estimate three figures. These numbers are not chiseled
in stone. Instead, they should guide you as you go shopping. The
figures are as follows:
Monthly payment. If you are going to take out a loan, how
much can you afford to pay each month?
Down Payment. How much cash can you put down to reduce your
monthly payments?
Purchase price of the car. The first two questions will
produce the answer to this final question. We've made this easy for
you by creating the "Affordability
Calculator." to see how much your monthly payment should
be.
Once you've determined how much you can spend for a down payment, a
monthly payment and the purchase price of the car, write these
figures on an index card. Later, in the heat of the moment, when you
are negotiating for a used car, you might need to check the card to
bring yourself back to earth.
Financing Options
You have three ways to pay for your used car:
Cash. Need we say more? Money talks — and you-know-what
walks.
Financing through a bank or credit union. We highly recommend
this route.
Financing through the dealer. This can work for some people
depending on their credit scores. Also, by prearranging financing
through an independent source, the dealer may sometimes offer to
beat the rate with a low-interest loan.
Financing through an independent source, such as a bank or credit
union, offers several advantages:
- Keeps negotiations simple in the dealership
- Allows you to shop competitive interest rates ahead of time
- Removes dependency on dealership financing
- Encourages you to stick to your budgeted amount
- Low interest loans can be arranged online through banks such
as PeopleFirst.com
Make sure to leave yourself time to arrange a loan before heading
for the dealership. Some online lenders guarantee a fast response,
so take the time to fill out the forms and do get approval. You
don't want to be dependant on borrowing money from the dealer.
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1.Choosing the
right car
2.Financing the used car
3.Shopping for a used car
4.Test-Driving a used car
5.Negotiating for a used car
6.Closing the deal
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