Money talks. And when it comes to buying a used car, not only does it talk, but having your finances in order can help you talk so well, you can smoothly close a deal that serves your best interests. There are basic rules to follow when buying a used car, such as an inspection by a mechanic, comparison-shopping, and tracking down the car's maintenance record. Additionally, an important and often overlooked rule is to have your financing ducks in a row before you kick a single tire. Failing to do so might make you want to kick yourself.

Four invaluable ideas

  1. Clean your credit. Before you shop for a car loan, examine your credit report. Any of the three credit bureaus (TransUnion, Equifax, Experian) can provide you with a report for a minimal cost. Make sure that there are no mistakes- a clean record will get you a stellar rate.
  2. Start loan shopping early. Shop around for the best auto loan you can find. Look into local banks and credit unions, which tend to have the best rates. They may also cut you a nice deal, especially if you have an account with them. Don't be shy about investigating cyber space. Many lenders will bid via the Internet for your business.
  3. Use pre-approval as leverage. Tell the seller that you've got a car loan in hand. You're a much more attractive customer if you have the power to close a deal with the stroke of a pen.
  4. Remember where the dealer's bread is buttered. Many people tend to go with dealer financing if the salesman offers a lower sticker price, but buyer beware: A lower price tag means the dealer gets paid on the back end from the in-house financing deal.

The moral of this dollar-saving story is to get your financing established before you start comparing used cars. Not only will it add to your negotiating power, it will allow you to focus on what's under the hood instead of what's in your wallet.

Published on November 21, 2006