Most people would love to pay cash and own their car free and clear, but not everyone is fortunate enough to be able to do so. Use another of the two options if you don't have much money. You can acquire a loan either from your current bank or through your car dealership.



Dealership loans are usually the most convenient option. Often, you can drive the car immediately if you get a loan through the dealership. That might not be the best idea, no matter how good it sounds.

You might have to pay a higher interest rate on a loan from the dealership, but this is dependent on your credit rating. If you have great credit, the entire process should progress smoothly. You may have to pay more if your credit isn't perfect.

Dealerships often get quotes from several lenders and then offer the loan with the best interest to you. Major car companies, like Honda, have their own financing department that can help you buy your used vehicle.

If you choose to arrange for a loan through the dealership, you'll have to decide how long of a term you want for your loan -- in other words, how long it will take to pay it off. Most loans run for between three and five years. Some people choose the longer term (five years) because it provides the lowest monthly payments, but it can actually end up costing you more.

You'll be better off picking the option that best fits your budget and simply paying a bit more each month, if you are able to do so. Watch the interest rate, and refinance if the opportunity presents itself. Prior to this, you can usually have a new used car paid off.

It will depend on the type of car you choose as well. The main factor that decides if you get a used car loan, is your credit score. If you have poor credit, perhaps wait to purchase your used auto until your credit rating improves. Try to improve your credit report by taking time to pay off some of the debts you already have.

If you are not able to understand your credit report or how to fix it, you can always contact a debt consolidator for assistance. You can get one free credit report each year so now is a good time to check your credit. Even if unable to fix it immediately, you may still be able to buy the used vehicle.

Be sure to make all of your monthly payments either on time or early while you continue to work on repairing your credit. Your credit will improve as you diligently do this.