When it comes time to get a used car, you have to think about how you want to pay for it. The first option, of course, is to pay cash for the vehicle. There are some specific advantages to paying for the vehicle up front like this. The biggest advantage, of course, is that you’ll pay less for the vehicle over time because you won’t have to pay interest on the car loan.
Most people, however, need some form of financing when they buy used cars. Financing can take many forms, from a bank or credit union loan to financing offered by the dealership. If you finance the vehicle, understand that you’re going to pay more for the car over time. You need to know several pieces of information before you agree to finance a vehicle, including:
- The price of the vehicle
- The dollar amount to be financed
- The finance charge (the dollar amount the financing will cost you)
- The Annual Percentage Rate (APR) of the loan
- The number of payments you’ll have to make on the vehicle
- The amount of your payments
- The overall price, including down payment, monthly payments, and any other fees.
Having all of this information up front helps you to know if you can really afford the vehicle, or if you need to consider purchasing a less expensive used car.
