You must understand that cars are not meant to be an investment. The fact remains that the car depreciates outrageously even if you use it as a reliable mode of transportation. When you think about used car dealerships, there are two approaches here – paying upfront or taking a car loan.

The ideal approach is paying upfront but if you do not have that amount of money, you can always consider a loan. Taking a car loan can be very helpful but you have to be careful. If you are not careful, you will end up owing more than your car’s worth.

Whenever you are thinking about a car loan, you should think beyond interest rate, monthly payment, and total cost. You should also look for the following factors:

Credit score

Before you start with your car-buying journey, it is crucial that you check and monitor your credit report and score. You have to know though that unlike mortgages, you can get a car loan even if you have bad credit – you just tend to pay more.

If you have a lower credit score, it is wise to shop around and make sure that you are getting the best rate. If you are not alert, you will end up paying more. Remember that if you have lower credit scores, the rates rise quickly.

Financing options

There are many financing options you can consider. This will depend on your credit score though. For instance, if you have a stellar credit score, it will be easy to get the best financing rates from the dealership, bank, credit unions, and other independent lenders.

If you do not have good credit, online lenders are available. If you want to apply online, you enjoy the simplified application and easy comparison. More importantly, you will know if you have been approved shortly after the application.


Ideally, you have to keep the term as short as you can because it means lower interest rates. If you can deal with higher monthly payments, keeping the term short is the practical thing to do. You can decide based on your monthly earnings.

Down payment

As much as possible, you need to put at least 20% down payment. If you can make a larger down payment, that will be good. Do not be tempted to drive off the car without putting a penny because you will be at risk in the near future.


You will come across sales tax, registration fees, documentation fees, and other extras. While it is tempting to include these fees in your financing, it is not wise. It is always better to pay for these miscellaneous with cash.

Loan reviews

The key to a successful purchase is comparing options. When it comes to comparing, many ignore used car loans reviews. It is important that you check loan reviews so you can identify the suitable lender for you. This can be helpful if you think about getting an online car loan.

Bottom line

When you walk to the car lot, you should have the necessary information and financing so you can negotiate accordingly. In the end, the dealer will give you a good rate because you already know how much you can borrow as well as the interest you have to pay.