- Cash. Need we say more? Money talks — you-know-what walks.
- Financing through the dealer. This can work for some people depending on their credit scores and the current interest rates offered. Also, by prearranging financing through an independent source, the dealer may sometimes offer to beat the rate with a low-interest loan.
- Financing through a bank, on-line lender or credit union. If not using your cash, we recommend this route because it will usually save money and give the consumer the most control over the transaction. (See more below.)
- 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
- Loans can be arranged online through places like Up2Drive.com or realcarloanok.com
Financing through an independent source (on-line lender, bank or credit union) offers several advantages:
The smart shopper will consider how to finance the vehicle at the beginning of the shopping process. This will avoid unpleasant surprises later in the game and help you make an unemotional decision that fits your budget.
You will need to estimate three figures that will guide you as you go shopping:
- 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 vehicle. Answering the first two questions will help you determine a realistic price range for your used vehicle.
The cost of a used vehicle is based on its condition, mileage, reliability, performance and popularity. Of course, you want a vehicle that is reliable and performs well. But do you want the same used vehicle everyone else wants? If so, you will pay a premium for it. In some cases, the only difference is the nameplate.
A difference in price frequently separates good-but-popular cars from the good-but-overlooked counterparts, sometimes as much as $3,000.
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