How to Finance a Used Automobile in the US

Besides purchasing a house, buying an auto is most likely one of the major financial decisions you need to make in your lifetime. After you think about the color, model, and brand of your dream car, you need to start considering how you will pay. Do you have enough cash? Or do you need more flexible financing options instead?

It’s one of the most critical questions that you need to consider as a prospective car buyer. Nowadays, a lot of people prefer to finance their used autos. If you choose to finance your dream auto, follow the steps below:

Preliminary preparations

Before you start looking for an auto finance company, you need to do your homework first. You need to check your credit score. If there are any lapses in your credit report, have them fixed right away. Your credit score will strongly affect how much financing you can get from a lending company.

Borrowers with low credit score have a hard time getting approval for car loans. You need personal details such as social security number to get your credit report.

Finding a financing company

A lot of buyers only start thinking about car financing when they’re looking at the website of dealerships. Don’t be part of the statistics. Car dealers can help you find a good financing package. They mostly partner with great lenders. However, it’s still highly recommended to pre-qualify for a suitable loan before you key in a web address like

Some of the best places you can look for a car loan are large and reputable banks, community banks, online banks, credit unions, and finance companies.

How to apply for automobile financing

Generally, you need to fill out a form to submit your application details. Some lending companies already process applications online, so you need to visit their site and fill out the forms. Others still do it the traditional way.

Some of the details you need to provide are your current debt, income, expenses and the amount of money you want to borrow. Regardless of where you send your application, you need to ensure that you provide true and accurate information. If you are caught providing false information, the lender may reject your application.

You can send your application to as many lenders as you want. Compare the rates of each company to determine who can offer the most suitable deal. You should, however, spread your applications because these records will appear in your credit report.

Tips on comparing auto financing options

When you compare offers, use a car loan calculator to determine how much you need to pay every month. You also need to compute the total cost of your target vehicle plus the additional fees you need to pay to process the application. Weigh each factor to ensure that you find the best car loan company.

Submit all the required paperwork and provide honest information and wait for your loan approval. Once you get approved for the loan, and you purchase a car, do everything you can to pay on time to avoid penalties and repossession.