Research not only used auto loan interest rates, but the car itself that you want. Think about your driving habits, your needs, and your budget.

Learn about car models, options, and prices by browsing newspaper ads, both display and classified
Use the Internet: enter "used car" as the key words and you'll find about how to buy a used car, conducting a pre-purchase inspection, and ads for cars for sale
Libraries and book stores have consumer publications that compare car models, options, and costs, and offer information about frequency-of-repair records, safety tests, and mileage. Many of these publications have details on the do's and don'ts of buying a used car
Once you've narrowed your car choice, research the frequency of repair and maintenance costs on the models in auto-related consumer magazines
Payment Options

You've picked your car. Now it's time for your used auto loan. You have two choices: pay in full or finance over time. There are benefits to both.

If you finance, the total cost of the car increases. That's because you're also paying for the cost of credit, which includes interest and other loan costs. You'll also have to consider how much you can put down, your monthly payment, the length of the loan, and the annual percentage rate (APR). Annual percentage rates usually are higher and loan periods generally are shorter on used cars than on new ones.

If you pay in cash, you have to come up with a lump sum, but save in the long run.

Dealers and lenders offer a variety of loan terms and payment schedules. Shop around, compare offers, and negotiate the best deal you can.

Watch Out For:

Ads offering financing to first-time buyers or people with bad credit. These offers often require a big down payment and a high APR.

If you decide to sell the car before the loan expires, the amount you receive from the sale may be far less than the amount you still need to pay off the loan. If the car is repossessed or declared a total loss because of an accident, you may be obligated to pay a considerable amount to repay the loan even after the proceeds from the sale of the car or the insurance payment have been deducted. It's commonly called being "upside down."

If you decide to finance, make sure you understand the following before signing any documents:

Exact price you're paying for the vehicle
Amount you're financing
Finance charge (the dollar amount the credit will cost you)
APR (a measure of the cost of credit, expressed as a yearly rate)
Number and amount of payments
Total sales price (the sum of the monthly payments plus the down payment)
Dealer Sales

Used cars are sold by:
Franchise and independent dealers
Rental car companies
Leasing companies
Used car superstores
Internet auctions or community boards
Individuals
Some dealers are attracting customers with "no-haggle prices," "factory certified" used cars, and better warranties. Consider the dealer's reputation when you evaluate these ads. You may want to call your local consumer protection agency, state professional General (AG), and the Better Business Bureau (BBB) to find out if any unresolved complaints are on file about a particular dealer.

Returning a Lemon

Dealers are not required by law to give used car buyers a three-day right to cancel. The right to return the car in a few days for a refund exists only if the dealer grants this privilege to buyers. Dealers may describe the right to cancel as a "cooling-off" period, a money-back guarantee, or a "no questions asked" return policy. Before you purchase from a dealer, ask about the dealer's return policy, get it in writing and read it carefully.