Tips for Financing a Pre-Owned Car

1) Check Your Credit

The first thing you should do when you're considering financing a pre-owned car? Check your credit history-and do it as far in advance as you can.

The reason for this is simple: You want to know your credit and give yourself the time to improve your credit if necessary. This will help you score more favorable interest rates when you finance a pre-owned car.

There are a few tips you can use to start improving your credit in as little as one month:

2) Set a Budget

You don't want to end up buying more car than you can afford. The easiest way to avoid this is to set an agreement with yourself early on about your budget. And stick to that budget no matter what!

How much should you plan to spend on a vehicle? That's up to you, but it's smart to keep your budget below 50% of your annual income.

You can use our payment calculator to get an idea of what your monthly payments will look like based on the car's price, the loan term and interest rate, and the down payment you make. Remember to think about monthly fuel costs, maintenance, and insurance payments when you consider how much car you can afford.

3) Put Down as Much as You Can

Put as much down as you comfortably can as a down payment. It may be tempting to finance as much of the cost as possible, but the larger the loan you take out, the higher the total cost you'll pay over time.

With a larger down payment and a smaller loan, you'll pay less interest over the course of the loan-a net benefit to you!

4) Keep Your Loan Term Short

Similar to the point above, it may be tempting to extend your loan term over as many years as possible. The longer the loan term, the lower your monthly payments-and that can look appealing.

But, longer loan terms typically result in higher interest rates. That means you'll be paying more over the course of your loan in interest. It's not uncommon to see loan terms of five to seven years, but we recommend limiting your term to no more than four years.

5) Get Multiple Quotes

Before you buy, be sure you have the best auto loan. The best way to do that is to get multiple quotes. If you have a strong relationship with your bank or credit union, that's a great place to start.

Our finance center can help too. We'll help you shop around the various lenders in our network, compare options, and choose one that gives you a fair rate.