Your step-by-step guide on how to finance a used car

Financing a used car doesn’t need to be stressful. We’ll take you through the typical process so you know what to expect and can feel confident you’ve found the right financing option for you.

• Understanding your budget: Before financing a car, assess your financial situation to determine what monthly payment amount is realistic and right for you.
• Know the financing lingo: Familiarize yourself with terms like interest rate, financing term and down payment to help you make informed decisions.
• Check your credit score: A higher credit score can typically help you secure better financing terms and lower interest rates.
• Consider total costs: Factor in additional expenses like insurance, gas, intended use, taxes and maintenance when thinking through your desired monthly payment.
• Read the fine print: Always review the financing agreement carefully to ensure you understand the terms of the loan.

Buying a car can be a significant expense, so it’s not unusual for car buyers to opt to finance their purchase to help spread out the cost over time. And financing isn’t limited to new car purchases – according to Experian’s State of the Automotive Finance Market Report, more than half of auto loans in 2025 were associated with the purchase of used vehicles.

Most banks, credit unions and car dealerships offer financing for used vehicles*, though the terms can sometimes differ from what you might encounter when financing a new car. On the plus side, because the purchase price of a used car is typically lower, your down payment and monthly payments may be smaller, although the interest rate could be higher. Some lenders also limit which used cars can be financed based on age or mileage.

At Enterprise Car Sales, we work with a broad network of lenders to make it easy for you to finance your next vehicle. Your sales consultant can help you navigate your options to ensure the terms align with your financial goals.

Here’s a step-by-step guide to help you prepare:

While they are similar, there are some differences between a direct loan and indirect or dealership financing.

• Direct loans are a contract you’ve arranged for and agreed to between you and a bank, finance company or credit union. Different lenders offer different rates, terms and conditions, so it’s best to shop around.
• Car dealership (indirect) financing is arranged through your dealership, which works with a bank or financing company to purchase and service your account, removing a little bit of that extra effort on your part.

In general, the higher your credit score the better financing rates you’ll be offered, but other factors go into determining these rates as well. Things like the amount of your down payment, the age of the vehicle you’re purchasing, length of your finance term and even general market conditions can all influence interest rates.

You can easily check your credit score on your own through the credit bureaus, such as Experian® or Equifax® or through a third-party service. Your credit card company or bank may also provide your score from time to time. These are soft credit checks and won’t affect your score.

If you decide to apply for financing, the bank or dealership will run a hard credit check. This looks at your detailed credit history and leaves a footprint which can lower your credit score, though a single hard credit check typically only affects your score slightly and the effect is temporary.

A down payment is a portion of the vehicle price that you pay at the time of purchase. It is removed from the total cost, and your amount financed will be based on your remaining balance. Around 10-20% is typically recommended as a down payment, but if you’re trading in a car, you may be able to use the amount you receive to cover some or all of your down payment.

TIP: You can use our online vehicle valuation tool to get an idea of the trade-in price of your vehicle.

The finance term is the number of months over which you want to spread your car payments. Most range from 36 to 72 months, with monthly payments decreasing as the term length increases.

TIP: Use our car payment calculator to help estimate your monthly payments and set a realistic budget.

If you’re ready to finance your next used car, you can get started online – just be sure you’ve selected the dealership location where you’ll be buying your vehicle – or stop by and talk to one of our knowledgeable sales consultants who will be happy to help with any questions. No pressure, just friendly, helpful advice and transparency you can trust.

Before signing a financing agreement, you’ll want to be sure you understand the words and phrases used along the way.

Think of this as the price tag on the money you borrow – it's the cost of financing expressed as a yearly percentage. While it’s not uncommon to hear “interest rate” and “APR” used interchangeably in conversation, APR includes your interest rate plus lender’s fees, giving you a clearer picture of the total cost of the loan, whereas the interest rate may only refer to the interest charged.

What affects it: Your credit score and history, the length of the financing term, and the car’s age.

The financing term is the length of your financing agreement and refers to how long you have to pay it back. Car financing terms often fall between 36 to 72 months, though the offers you receive will depend on the lender. Your financing term can impact your monthly payments, APR and how much interest you’ll pay over time.

• Short term financing: Typically come with higher monthly payments since you’ll be paying off the loan over a shorter period of time, but can also come with a lower interest rate and less money spent on interest overall.
• Long term financing: With more time to pay, your monthly payments should be lower, but the interest rate and total spent on interest overall are usually higher.

This is the amount of money you’re borrowing – the purchase price of the car including any applicable fees and taxes minus any down payment and the value of your trade-in (if you have one) – and does not include interest charges. For instance, if you buy a $30,000 car and put $5,000 down, your principal will be $25,000.

This is the cash you pay upfront. A larger down payment reduces your principal, which lowers your monthly payment and saves you money on interest paid over the financing term. If you’re trading in a vehicle at the same time, the value of your trade can sometimes be used as a down payment.

This is the amount you must pay every month. It is calculated based on your principal, APR and financing term.

This is the most important number, and one that buyers – especially first-time car buyers – often ignore. It’s the grand total of all the money you’ll have paid by the end of the financing term, including the price of the car, interest and fees. You can plan to pay it off early to reduce the money spent on interest but be sure to check your agreement for any prepayment penalties and take those into account.