How to Finance a Used Car

The following advice will help you avoid buying an unreliable used car and paying too much for one, which both drain your finances and could affect your future car-buying options. Read on for more expert advice.

Check the Vehicle History. You don’t want to be on the hook for paying off a loan if it turns out there are significant problems with the car or the resale value plummets due to hidden crash damage.

Vehicle history reports can fail to indicate flood, collision, or other damage, so checking more than one for any car you are serious about buying can help eliminate potential blind spots.

Reports from CarFax can cost between $25 and $45 (many dealers include them for free), and VINcheck is offered for free by the National Insurance Crime Bureau. The National Motor Vehicle Title Information System also offers links to numerous approved vehicle history providers. And always have a vehicle inspected by a trusted mechanic before you buy it.

Say No to Dealer Add-Ons. Once you’ve agreed on a price, the dealer may try to persuade you to buy an extended warranty. Don’t consider it before making sure the original factory warranty has expired. Certified pre-owned (CPO) cars come with extended coverage, so you may not need more. In general, buying an extended warranty is usually not worth the money. Choosing a car known for reliability is a better investment.

Instead of purchasing an extended warranty, consider starting a rainy day fund for maintenance. That money could earn a little interest if it’s in the right type of account, and you can apply what you don’t use to the purchase of your next car. (Learn more about avoiding dealer add-ons.)

Factor In Repair Costs. If you’re buying an older vehicle, you’ll definitely save money over the price of a new car. But don’t forget the inevitable cost of replacement tires, brake pad replacements, and unexpected repairs, which varies widely depending on the model, its age, and how it has been used.

Choosing a model from CR’s list of recommended used cars may help limit repair costs; the CR Used Car Marketplace shows owner satisfaction and reliability right within the listings. Whichever car you choose, come up with a rough annual budget for upkeep by using our guidelines on car maintenance and our Car Repair Estimator. Add that to the estimated annual cost to finance the car to find out how much money you’ll actually save by buying used.