Financing a used car: Important tips for cheap financing

 

Used car financing can be a good way to buy a good, new car. We tell you what you should pay attention to and which financing options may be considered.

Before you decide on used car financing, it is worth taking a look at the most popular models. These vehicles often offer excellent value for money and are particularly sought after by buyers:

Check out the best used cars of 2025 in a separate article.

 

What is used car financing

Used car financing describes the purchase of a used vehicle by means of a loan or alternative financing models. The buyer does not pay the purchase price in one lump sum, but in monthly installments. This makes it possible to acquire a high-quality vehicle without completely using up your own savings.

Depending on the price development of used cars, you can find good and cheap models. The Mercedes Young Stars can also usually be financed.

Advantages of used car financing

• Plannable costs: The fixed monthly installments ensure financial clarity.
• Advanced Purchasing Options: Even more expensive used cars can be financed without paying the entire purchase price at once.
• Flexibility: Various financing models make it possible to tailor financing to individual needs.

Why does used car financing make sense?

Buying a used vehicle is often cheaper than buying a new car. In combination with financing, this can be an ideal solution to combine quality and price. Especially with brands such as BMW or Audi, high-quality models can be found at affordable conditions via used car offers.

 

What are the ways to finance a used car?

First of all, you should decide on a financing model. We present three options below:

Standard financing

The standard financing is via a classic car loan. In this case, the purchase price of the vehicle is pre-financed by the bank or dealer, and the customer pays back this amount in monthly installments. The amount of the installments is determined by the interest rate, the loan amount and the term.

Advantages:

• Fixed rates ensure clear planning.
• After the final payment, the vehicle belongs entirely to the buyer.
• No restrictions on mileage or vehicle use.

Disadvantages:

• Higher monthly charge compared to leasing or flexible models.
• Total costs can increase due to interest.

Suitable for whom?

Standard financing is ideal for those who want to use their vehicle for the long term and do not want any restrictions from leasing contracts.

3-way financing

3-way financing combines elements of credit and leasing. It starts with a down payment, followed by monthly installments. At the end of the term, you have three options:

• Pay the balance and take over the vehicle.
• Return the vehicle.
• Take out follow-up financing for the remaining amount.

Advantages:

• Lower monthly burden due to high final installment.
• Flexibility at the end of the term.
• Attractive for buyers who want to keep the final decision on the purchase of a vehicle open.

Disadvantages:

• The high final installment can be too much of a burden.
• The return value of the vehicle is not always guaranteed.

Suitable for whom?

This model is a good fit for you if you want to stay financially flexible and keep your options open at the end of the term.

Depending on where you buy your used car, you may not always have everything to choose from.

 

Used Car Leasing

When leasing a used car, the customer "rents" the vehicle for a certain period of time. At the end of the contract period, the vehicle is returned or replaced by a one-off payment at the end of the term, i.e. purchased.

Advantages:

• Lower monthly installments compared to standard financing.
• No risk of depreciation.
• Ideal for people who want to drive a new vehicle on a regular basis.

Disadvantages:

• Vehicle does not belong to you after the term.
• Restrictions due to mileage limits and possible additional payments.

Suitable for whom?

Leasing is ideal for people who want to remain flexible and not commit to a specific vehicle for the long term.

Financing a used car, what you need to consider

Financing a used car requires careful planning. The following points should be considered:

 

Choose loan amount, interest rate and term

The choice of the loan amount, the interest rate and the term has a significant influence on the monthly burden and the total cost of financing.

• Credit: The sum should be chosen realistically. Experts advise paying at least 20 percent of the purchase price as a down payment to reduce the interest burden.
• Interest rate: A low interest rate is crucial to the overall cost. It is worth comparing different providers and offers.
• Runtime: Shorter transit times mean higher rates, but also lower overall costs. Longer terms ensure lower rates, but are usually more expensive because of the higher interest burden.

Requirements for a used car loan

In order to obtain a loan for the financing of a used car, the following requirements must usually be met:

• Credit rating: A good credit score is often required. Negative entries in the credit bureau can make it more difficult to grant loans. Car financing without credit bureau is sometimes possible.
• Proof of income: Regular income that covers the monthly installments must be proven.
• Minimum age: As a rule, borrowers must be at least 18 years old.
• Tip: Check your creditworthiness in advance and use a loan calculator to determine your financial resilience.

 

How should you insure a financed used car?

For financed vehicles, comprehensive insurance is usually mandatory. It protects both the buyer and the financing bank from losses due to accidents or theft.

• Comprehensive: Especially advisable for young and high-priced used cars.
• Partial casco: A cheap alternative for older vehicles where a total loss would be manageable.

Compare different providers and tariffs to find the best insurance coverage.

Financing runs for several years, so your personal situation can change. It is also possible to sell a financed car if circumstances require it.

Frequently asked questions about used car financing

If you still have questions about financing used cars, we have a few more answers here.

Can you finance used cars without a down payment?

Yes, it is possible to finance a used car without a down payment. However, this can increase the monthly installments and the total cost, as the entire purchase price is financed including interest.

Financing without a down payment makes it easier to get started, but requires a stable financial situation to be able to bear the higher monthly burdens. In addition, the interest rate should be checked carefully, as it can often be higher.

How does BMW used car financing work?

BMW Used Car Financing is offered by BMW Financial Services. It is characterized by attractive conditions, flexible terms and additional advantages such as warranty services.

Particularities:

• Options: Customers can choose between leasing, standard financing and 3-way financing.
• Benefits: Service packages and warranties are often integrated to make the purchase safer.
• Flexibility: BMW often offers special promotions with low interest rates on certain models.

Even if no warranty is given, you must obtain a warranty or liability for material defects for the used car from the dealer.

Used car financing offers a flexible way to purchase a used vehicle without having to pay the purchase price all at once. Whether standard financing, 3-way financing or leasing – each method has its specific advantages and disadvantages.

It is important that the financing is tailored to personal needs and financial possibilities. Factors such as interest rate, term and insurance should be carefully examined. A well-planned purchase ensures that you can enjoy your vehicle in the long term and maintain your financial security.