How Does Used Car Financing Work?

The dealership is not the lender

When you finance a vehicle at a dealership, the dealership submits your application to lenders. The lenders decide whether to approve, at what rate, for what term, and with what down payment. Nobody at the dealership can approve a loan on their own.

That is why no honest salesperson can promise you an approval before an application is submitted. Financing is always subject to lender requirements and approval.

What lenders look at

Generally: income and how stable it is, time at your job, your credit history, the amount you are putting down, and the vehicle itself — its year, mileage and value relative to the loan.

Term length changes everything

A longer term lowers the monthly payment but increases total interest paid. A shorter term costs more monthly and less overall. Decide which matters more to you before you sit down.