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How To Get Used Car Loans

Updated on September 3, 2012

How To Get Used Car Loans

Buying a used car can end up being as complicated as buying a new car, especially if you're not going to pay cash for the car.

Knowing what criteria is involved in qualifying for used car loans is very important.

The key to getting the best loan is to be prepared ahead of time. That way, you'll be assured of getting the best loan possible.

You won't have to pay for your car long after it's lost its value or pay exorbitant interest rates if you know how to go about getting your used car loan from the beginning....and how to get the best loan possible.

Let's take a look at some of the criteria for getting a used car loan and then how to keep yourself financially fit before and after the deal!

What You Need to Know About Car Loans

Before you ever even think about going out to look at cars or think of your "dream car", there are some things you should know about car loans - used and new cars.

What do lenders look at before they give you a loan? They look at what's called your "debt to income" ratio. This is all part of the credit report and impacts positively or negatively your credit score.

How can you get the best auto loan possible? By keeping your debt to income ratio below 36%.

If you don't? You might be in line to get a bad credit loan. Credit scores are great but you have to understand credit scoring to realize how it all works. Lenders look at the amount of credit cards you have currently open (even if they have a zero balance). They look at this as your "potential" indebtedness and it can drag down your credit score - as insane as that sounds.

The bottom line is, before you even start to think of the car that you want, you should make sure you have your credit score and that you also have your credit history. Having them in hand is the best way to get the best car loan on a new car or a used car.

Any mistakes on your credit history should be taken care of before you go to apply for a car loan because lenders look at "pending" issues as problems.

Dealers can also try to lock you into a bad credit loan by claiming that your credit score is too low or that your credit report has black marks on it. Dealerships are also notorious for the "bad credit report or credit score scam". They tell you they've researched it and you don't qualify for the "best loan" because of your score or your you'll have to settle for a subprime loan loan. Having that information in your own hand use the word....priceless.

What should your credit score score be to get the best loans? Above 680 you're considered a "prime borrower". You will without a doubt get a loan.

If your score is below 680, you are subprime and will most likely get a loan but with a higher APR.

Below 550, you probably won't be considered for a car loan at all and they probably won't even offer you a bad credit loan.

People often think that if they've never missed a payment their credit score can't possibly be low but again, even having multiple cards that are paid off but still open can decrease your credit score. Why is that? Again, it's the potential for debt. You could go out tonight and end up with that much debt.

You can increase your credit score by closing out cards that aren't being used and by using standard credit cards like Visa or Mastercard instead of multiple "in store" credit cards. But you won't know what your credit report says or what your credit score is if you don't get it!

Debt to Income Ratio and Credit Repair


  • You shouldn't be buying a used car if your income is less than $1600 per month
  • Don't apply for car loans if you haven't been on a job for at least 6 months
  • Likewise, if you've moved in the last 6 months, you might be denied
  • Past car loans help your credit history but can also hurt you if you have bad credit history so make sure you get that cleaned up
  • Remember that this car's payment history will reflect positively or negatively on your future credit report
  • Check out online sources such as my and for best rates and then ask lenders to match those rates.....or stick with the online companies

How To Get Used Car Loans Info You Need

Again, make sure your credit is repaired and is in the best state possible before applying for a car loan.

Get all black marks fixed before trying to get a car loan.

If you have credit card balances, pay them off by attacking the highest APR cards first.

Self employment can work against you for car loans of any kind because it's unpredictable.

Wait to apply for a car loan if you have moved in the last 6 months or if you have bad credit.

Don't apply for a loan until your credit score is up to at least 680.

Look into financing through a credit union for a good rate.

You can buy a used car from a dealership using and

You can also buy a used car from a private party using

Be sure to check out the car loan payment calculators on line to see what your monthly payments will end up being before you buy.

There are many ways to save money on getting a used car loan but the one factor that makes the most difference in any loan these days is your credit score and your credit report.

Make sure that those are in order and you should have no problem securing the best loan for your used car on the market.

Get Your Credit Score and Report Here



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    • monicamelendez profile image

      monicamelendez 5 years ago from Salt Lake City

      I got a used car loan for my second car and I didn't do well. I ended up paying so much money in interest because I didn't know what I was doing. Thanks for giving some good advice. I bet it will help a lot of people.

    • akirchner profile image

      Audrey Kirchner 7 years ago from Washington

      Thank you, Hanna!

    • Hello, hello, profile image

      Hello, hello, 7 years ago from London, UK

      Very well laid out for people who need them.

    • akirchner profile image

      Audrey Kirchner 7 years ago from Washington

      Thanks, Simone for stopping by.

    • Simone Smith profile image

      Simone Haruko Smith 7 years ago from San Francisco

      I really appreciate your outlining these suggested requirements for getting used - I hope people heed them!

    • akirchner profile image

      Audrey Kirchner 7 years ago from Washington

      Thanks so much for stopping by, Faye - Godspeed to you as well.

    • creativeone59 profile image

      benny Faye Douglass 7 years ago from Gold Canyon, Arizona

      Thank you Audrey, for great information. Thank you for sharing. Godspeed. creatvieone59