Identifying Your Target Cars & Arranging FinancingHere at Edmunds, we spend much of our time dispensing advice on new car buying, but the used car market is actually far larger: In 2008, 36.5 million used vehicles were sold, compared with 13.2 million new cars. Part of the reason for the disparity is the steep decline in a new car's value in just the first year of ownership — from 20-30 percent.

But when hunting for a used car bargain, how do you separate the diamonds from the dogs? And how do you keep from getting ripped off along the way? Our three-part article walks you step-by-step through the process, so you can go forward with confidence.

Step 1: Decide Your Price Range and Arrange Financing

If you're like most people and need to borrow money to buy a car, begin by considering how much car you can really afford. Using our Affordability Calculator, you can play with the numbers to obtain a price range to shop in, based on your monthly budget. (This works for both new and used cars.)

Then, the smartest move you can make is to arrange financing before you go to the dealership, because it puts you in a much stronger negotiating position. This important step presents a number of advantages because it:

Keeps negotiations simple at a dealership
Allows you to shop for competitive interest rates ahead of time
Removes dependency on dealership financing
Encourages you to stick to your budgeted amount


You can easily arrange financing using an online lender that takes applications over the Internet. The lender calls within 15 minutes to let you know if the loan is approved. Once you have a specific dealer in mind, the lender express-mails you a check. The check can be made payable to any new car dealer and is usually good for 30 days. If, at the end of this period, the check isn't used, there's no obligation.