Used cars for sale or on finance (2024)

FAQs

Is it better to pay cash or finance a car? ›

Although paying cash helps you save money, you'll miss out on an opportunity to build credit. Making consistent, on-time payments on an auto loan can be helpful in improving your credit score. You can't take advantage of dealer incentives. Dealers commonly offer incentives to finance a vehicle through them.

Used car loans are riskier for lenders because a used car's value is harder to assess than that of a new car. As a result, you'll generally find fewer loan options and higher interest rates when trying to finance a used car.

Always plan to get a vehicle history report. This is great as a first step - it immediately lets you know whether or not you're chasing a dead end. Carfax is a go-to resource for checking a VHR - all you need is the car's vehicle identification number (VIN).

It's usually easier to secure a loan for a new car than a used car because lenders can more easily determine the value of a new car. Lenders are also more likely to assume a new car is in good condition when you drive it off the lot.

Dealerships don't want you to pay cash because they don't earn a commission on arranging financing. If you qualify for in-house financing, the profits they miss out on increase since they don't have to work with a third-party lender.

In some cases, especially when buying a used vehicle, a salesperson will be more willing to work with you on negotiations if you pay cash. While this won't always be true, some used car dealers will come down on the price if they can get all of it upfront.

There's no rule to how many miles on a used car is too much, but by attempting to stick to the 12,000 miles per year rule is a great place to start. Find out how old the car is, multiple the number of years by 12,000, and if the number on the odometer is significantly higher than that, some concern might be warranted.

If safety is of utmost importance to you, check sites like Consumer Reports or IIHS-HLDI for safety ratings and go from there. If you've got your heart set on a particular make and model, check your local dealerships for certified used cars, which are usually inspected and come with warranties.

NerdWallet typically recommends keeping auto loans to no more than 60 months for new cars and 36 months for used cars — although that can be a challenge for some people in today's market with high car prices. Ultimately, choosing the best auto loan term depends on balancing cost, affordability and your specific needs.

What month is it best to buy a car? ›

Your best bet is to buy between October and January 1st. December is particularly ripe for deals, discounts, rebates and other incentives as well. This is because car salespeople are aggressively working to meet their monthly, quarterly and yearly quotas.

You may have a limited selection: If you stick to your cash budget, some models will likely be out of your price range. You may not be able to access some dealership incentives: Many dealers offer rebates and other incentives, but often only if you finance your vehicle.

If you can only qualify for high-rate financing options, it may make sense to pay cash instead. That's because interest charges can add up very fast, making it more challenging to repay your balances. You could end up paying significantly more than your initial purchase amount due to added interest costs.

Paying cash may hinder your chances of getting the best deal

"When dealers are negotiating the purchase price, they anticipate making money on the back end, via financing," Bill explains. "So if you tell them up front you're paying cash, the dealer knows he has no opportunity to make money off you from financing.

In the short term, paying off your car loan early will impact your credit score — usually by dropping it a few points. Over the long term, it may rise because you've reduced your debt-to-income ratio. Whether to pay off a car loan early depends on your budget, interest rate and other financial goals.